Recently, the People's Bank of China (PBOC),the China Securities Regulatory Commission (CSRC), and the State Administration of Foreign Exchange (SAFE) jointly issued the Announcement on Further Supporting Overseas Institutional Investors In Conducting Bond Repurchase Business (hereinafter referred to as the Announcement). Officials from the PBOC and the SAFE addressed related press questions.
1.Q:What is the background of issuing the Announcement?
A:In recent years, China's bond market has become increasingly attractive and influential globally. As of end-August 2025, a total of 1,170 overseas institutions from 80 countries and regions have entered the market, with their holdings totaling around RMB4trillion.Chinese bonds have also been included in the three major international bond indices: Bloomberg Barclays, J.P. Morgan, and FTSE Russell. As overseas institutional investors continuously expand their holdings, in view of improving capital utilization, demand for bond repurchase (repo) business continues to grow. The PBOC has opened up bond repo business in China's InterbankBond Market(CIBM) in an orderly manner.It supported overseas sovereign institutions,overseas RMB clearing banks and participating banks to engage in bond repo business in the CIBM from 2015 onward. And in collaboration with the Hong Kong Monetary Authority (HKMA), it launched offshore bond repo business using bonds under the Bond Connect as collateral in2025.
To further meet overseas investors’needs for liquidity management through bond repo business, enhance connectivity between onshore and offshore financial markets, and promote high-level opening-up of China's bond market, the PBOC, CSRC and SAFE jointly issued the Announcement. It enhances support for various types of overseas institutional investors to conduct bond repo business in China's bond market.
2.Q:What types of overseas entities will be allowed to engage in the bond repo business in the CIBM?
A: After the release of the Announcement, overseas institutional investors in the CIBM are all eligible to engage in the bond repo business, including those entering the market through both the CIBM Direct and the Bond Connect. Specifically, the eligible types of investors are as follows: overseas central banks or monetary authorities, international financial organizations, and sovereign wealth funds; various types of overseas financial institutions including commercial banks, insurance companies, securities firms, fund management companies, futures companies, trust companies, and other asset management institutions; and medium- to long-term institutional investors including pension funds, charitable funds, and endowment funds.
In addition, overseas financial infrastructures, self-regulatory organizations and industry associations may provide services for overseas institutional investors engaging in bond repobusiness in the CIBM. Relevant acts shall comply with Chinese laws and regulations, as well as rules made by financial regulatory authorities. Overseas self-regulatory organizations and industry associations shall file the standard version of the Master Agreement with the PBOC.
3.Q:Through what methods can overseas institutional investors conduct bond repo business?
A:Currently, China's pledged repo differs from international operational practices. The underlying bonds of pledged repo will not be transferred from the repo seller to the repo buyer, and instead, they are frozen under the repo seller. However, in major global markets, the prevailing repo model is that underlying bonds are transferred to repo buyers and can be reused by the repo buyer. It is similar to the current outright repo in the CIBM. During the drafting process of the Announcement, overseas institutional investors widely expressed the view that enabling underlying bonds to be transferred and reused leads to clearer rights and obligations, and more efficient default resolution. It better aligns with the customary practices of overseas institutional investors, and it is beneficial for improving the overall liquidity of the bond market.
After the release of the Announcement, overseas institutional investors shall transfer the underlying bonds when engaging in repo business in the CIBM, while the collateral can be reused, which aligns with interational practices. Meanwhile, in order to facilitate a smooth transition for overseas institutional investors already engaged in bond repo business in the CIBM, these institutions may continue to conduct transactions under the previous model during the transition period, which will be 12 months from the effective date of the Announcement.
4.Q:What are the thoughts and plans regrading risk prevention in the bond repo business of overseas institutional investors?
A:Balancing opening-up and security serves as the cornerstone for the high-level opening-up of financial markets. It is also the key principle of promoting the bond repo business for overseas institutional investors. We have improved the design of processes of bond repo business for overseas institutional investors, including trading, custody, settlement, and exchange, achieving the closed-loop management of funds. We have also strengthened the penetrating supervision and monitoring through measures such as requiring the report of trading and custody data.
In terms of the counterparties, overseas institutional investors engaging in bond repo business through the Bond Connect shall trade with market makers in the initial phase, with reference to the cash bond trading mechanism. Market makers shall possess ample funds and robust capability to quote bonds. They will be selected among the open market primary dealers with good track record of market-making in the Bond Connect. The list will be released by the National Interbank Funding Center.
In terms of the quotas, the cash lending limit of market makers shall comply with the unified management framework for cross-border RMB interbank financing. The repo balance of overseas institutional investors shall comply with the regulations on the leverage ratio of outright repo in the CIBM. The infrastructures in the interbank market will release detailed rules to clarify the specific requirements.
5.Q:What are the specific management requirements for the fund payments and receipts in the bond repo business of overseas institutional investors?
A: In the bond repo business of overseas institutional investors, relevant fund payments and receipts shall meet the fund and account management regulations applicable to the corresponding investment channel through which the cash bond transactions aremade. Specific measures will be implemented in accordance with the Rules on Funds Invested by Overseas Institutional Investors in China's Bond Market, the Announcement No. 2[2020] of the People's Bank of China and the State Administration of Foreign Exchange and the Announcement No.4 [2022] of the People's Bank of China, the China Securities Regulatory Commission and the State Administration ofForeign Exchange, and other relevant regulations.
