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Cross-border Cooperation between Financial Market Infrastructures to Facilitate the Opening-up and Development of China’s Bond Market

On September 9, 2019, China Central Depository & Clearing Co., Ltd. (CCDC) and Euroclear Bank S.A./N.V. (Euroclear Bank) signed a memorandum of understanding (MOU) in Shanghai.

CCDC pays close attention to the “New Eleven Measures” in the financial services industry on financial opening-up and on improving overseas investors’ access to China’s bond market, and works hard to implement the critical tasks listed on the PBC’s 2019 work conference about improving market access arrangements and cross-border interconnectivity between domestic and overseas FMIs. With guidance and support from the PBC and other competent authorities, CCDC follows the high-level instructions conscientiously, and keeps developing and deepening its business cooperation with overseas FMIs.

Euroclear Bank, a renowned international central securities depository and settlement system provider, has always been an important partner to CCDC in the latter’s strategy of internationalization. Since 2007, the two companies have maintained a good relationship with each other. The MOU signed this time is an extension and reinforcement of their long-term cooperative relationship, and communicates the intention of the two in exploring for opportunities to provide joint  cross-border investor services and collateral management services under the current regulatory framework. The two also expressed their intention of trying to develop a service framework in China’s bond market that allows for overseas investors to enter the market in a more convenient way with features as “CSD-registered ownership plus multilayered value-added services”. The two will also explore for efficient and convenient cross-border collateral solutions.

Li Jun, Deputy Director of the Shanghai Municipal Financial Regulatory Bureau, said that with the aim of building Shanghai into an international financial center, Shanghai had been active in pursuing financial opening-up and innovation, and had made positive progress. The cross-border cooperation between CCDC and Euroclear Bank was a meaningful attempt in promoting market opening-up in a diversified manner and developing cross-border solutions to risk management, and would bring new impetus to the development of the Shanghai international financial center.

Zhang Hong, Director of the Financial Services Bureau of the Pudong New Area, expressed her support and expectations for the cooperation. She said that Pudong New Area had been actively optimizing its business environment and had become home to many renowned financial enterprises and factor markets. The linkage between FMIs would attract more overseas investors to participate in Shanghai’s financial market, thereby enhancing the pricing power, influence and resource allocation capabilities of the Shanghai international financial center.

Valérie Urbain, CEO of Euroclear Bank, said in her speech that Euroclear Bank attached great importance to the strategic cooperation with CCDC, which would consolidate and deepen its Pan-Asian development strategy formulated three decades ago. The signing of the MOU was the beginning of a long-term cooperation where the two sides would leverage their individual intelligence to improve the service level for overseas investors participating in the Chinese market, and to create opportunities that would benefit the global capital market as a whole.

Shui Ruqing, Chairman of CCDC, stated that with the guidance and support of  competent authorities, CCDC kept developing and deepening its communication and exchange with overseas FMIs on different fronts. Based on their respective advantages, CCDC and Euroclear actively promoted friendly cooperation with each other. The signing of the MOU opened up a new chapter for the two companies to foster practical and professional cross-border linkage cooperation, and would give a strong boost to the further liberalization of China’s bond market.

In the next stage, the two sides will work together with an attitude that is professional, pragmatic, open and inclusive. With the aim of developing efficient and convenient access channels, they will focus on the needs of international investors, always pay attention to prevention against risks, and face up to the outstanding problems in the current direct access channel. With these efforts, they will strive to provide a cross-border link mechanism that integrates the direct holding account structure and the multilayered value-added services, to make it easier for overseas investors to access the Chinese market.

Meanwhile, the two sides will explore for cross-border collateral solutions and try to introduce technical link between the collateral platforms of the two. They will jointly launch cross-border collateral management products that are applicable to various business scenarios. They will also promote the inclusion of RMB bonds into the scope of internationally acceptable eligible collateral and support China’s bond market in achieving a deeper and higher level of openness.

 

About Euroclear Bank S.A./N.A.

Euroclear Bank provides settlement and related securities services for cross-border transactions involving domestic and international bonds, equities, derivatives and investment funds. Serving major financial institutions located in more than 90 countries, Euroclear Bank, based in Brussels, is part of the Euroclear group. Euroclear Bank is rated AA+ by Fitch Ratings and AA by Standard & Poor’s.

As well as Euroclear Bank, the Euroclear group includes Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & Ireland. The Euroclear group settled the equivalent of EUR 791 trillion in securities transactions in 2018, representing 230 million domestic and cross-border transactions and held EUR 28.8 trillion in assets for clients.

For more information, please visit: https://www.euroclear.com/en.html

 

2019.09.09
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