By the end of July 2022, in terms of incorporated entities, 520 overseas investors have registered through CIBM Direct scheme, adding 2 new entities over last month. 764 overseas investors through Bond Connect scheme, adding 7 new entities over last month.
Registered number of overseas investors by the end of July
In July, the cash bond trading turnover of overseas investors amounted to 1031.1 billion yuan, a decrease of 10% YoY and an increase of 9% MoM. This amount represented about 4% of the total turnover for interbank cash bond market of the same month. The total monthly figure comprised 518.8 billion yuan of bond purchase and 512.3 billion yuan of bond sell, giving a net purchase of 6.6 billion yuan. The turnover reached 339.7 billion yuan for CIBM Direct (311.7 billion yuan through agent trade and 28.0 billion yuan through Direct-RFQ service) with net purchase of 18.6 billion yuan, and 691.4 billion yuan for Bond Connect with net sell of 12.0 billion yuan.
In July, overseas investors traded 85.7 billion yuan during extended trading hours, which accounted for 8% of the total turnover of overseas investors.
Bond Type
Bond Tenor
Settlement Cycle
In July, onshore investors mainly traded CNH bonds, USD bonds and others through Southbound Bond Connect.
To support the inclusion of China bonds in the international bond index and better fulfill the trading demands of overseas passive investors, CFETS has advanced the update time of closing order trading information to around 17:30 since July 2022, which received positive response from the market. In July, foreign investors conducted strategic trading such as tracking investment and position adjustment through the closing order trading service with domestic quotation dealers. The trading subjects were mainly CGBs and policy bank bonds.
On July 4th, the People’s Bank of China, the Hong Kong Securities and Futures Commission and the Hong Kong Monetary Authority issued a joint announcement on the cooperation of the Hong Kong and Mainland interest rate swap markets (Swap Connect). Through the connection between Hong Kong and Mainland infrastructure institutions, domestic and foreign investors can participate in the interest rate swap markets in both places. CFETS and Shanghai Clearing House, together with OTC Clearing Hong Kong Limited cooperate on Swap Connect to provide derivatives trading, clearing and other services. CFETS provides derivatives trading services for domestic and foreign investors. Foreign investors can use overseas third-party platforms approved by the PBC to trade on CFETS trading system and conduct derivatives transactions with domestic dealers. The preparation of the Swap Connect is expected to take about 6 months, and the official launch time is subject to regulatory approval and further notice.
To reduce the investment cost of foreign investors, the BCCL, a joint venture between CFETS and HKEX, has reduced the service fee since July 11th. If the remaining term of the trading subject is less than or equal to one year, the service fee has reduced from 0.0020% of the total face value to 0.0015%. If the remaining term of the trading subject is more than one year, the service fee has reduced from 0.0040% of the total face value to 0.0030%. The rate reduction reaches 25%.