The People’s Bank of China issued a new notice aimed at increasing residents’ property income, accelerating the development of the multi-level bond market, expanding the variety of over-the-counter bond investments, and improving convenience for investors. The notice, entitled “Notice on Matters Concerning Counter Business in the Inter-bank Bond Market,” was issued on February 29.
The notice expands the types of over-the-counter bond investments and optimizes institutional arrangements to facilitate bond investment by residents and other institutional investors. It clarifies the scope of counter investors, including individual investors, companies, and financial institutions. The types of bonds available for over-the-counter trading include treasury bonds, local government bonds, financial bonds, corporate credit bonds, and other inter-bank bond market bond types.
The notice also streamlines investor account opening rules, allowing investors who have already opened an account in the inter-bank bond market to open a bond account at over-the-counter business institutions without needing additional approval. Foreign investors allowed in the inter-bank bond market can also open bond accounts through counter business institutions and domestic custodian banks.
Over-the-counter bond business operators are required to establish reasonable investor suitability management systems, strengthen internal control management, and prevent and control business risks.
In terms of transactions, over-the-counter bond business services are provided to individuals and enterprises, mainly involving treasury bonds, local government bonds, and policy financial bonds. As of the end of 2023, 30 commercial banks in China had launched over-the-counter bond services and opened 6.3 million investor accounts.
Compared to bank deposits and other financial products, over-the-counter bonds offer higher coupon rates, government-backed security, low risk, stable returns, and flexibility in trading. Investors can purchase bonds through bank outlets or electronic banking channels, with a minimum investment of 100 yuan.
The People’s Bank of China believes that promoting over-the-counter bond business will expand residents’ investment channels, optimize financing structures, and develop multi-level bond markets. It also enhances market activity and promotes market stratification. Institutions operating over-the-counter bond business are encouraged to establish investor suitability management systems, disclose product risks, strengthen internal control management, and clarify risk rights and responsibilities with investors.