Tradeweb to be main ‘ Bond Connect’ platform
Foreign investors linked with Chinese mainland’s $ 9.5 trillion market
Tradeweb, a fixed- income trading platform, will connect with China Foreign Exchange Trading System ( CFETS) in order to become the main interface for offshore investors trading in the Chinese mainland’s bond market through the country’s upcoming “Bond Connect” scheme, the company said on Monday.
Talks between Tradeweb and the Hong Kong Exchanges and Clearing Ltd were exclusively reported by Reuters last August.
Tradeweb, majority- owned by Thomson Reuters, the parent company of Reuters News, matches buyers and sellers of fixed- income products across more than 22 international OTC bond markets.
In a statement, Tradeweb said that eligible overseas institutional investors from its network of more than 2,000 clients would be able to trade directly with liquidity providers in the CFETS market through Tradeweb’s platform.
Investors trading through Tradeweb will be able to use global custodians to settle through a nominee holding arrangement provided by the Hong Kong Monetary Authority’s Central Moneymarkets Unit, the statement said.
Mainland’s bond market is the world’s third largest, worth about 65 trillion yuan ($ 9.5 trillion), the Hong Kong Monetary Authority said in May.
Hong Kong and Chinese mainland regulators said in May that they had approved the long- awaited “Bond Connect” program, with only “Northbound” trades – trading of mainland bonds by foreign and Hong Kong investors – permitted in its initial stage.
On June 12, the CFETS published draft rules for the program, requiring foreign investors targeting the mainland’s bond market under the connection to submit quotation requests of a minimum 1 million yuan.
The “Bond Connect” program has been planned in the wake of a scheme launched in 2014 that allows two- way trading between the Hong Kong and Shanghai stock markets. Bankers say it would be a milestone in the opening of the mainland’s capital markets.
Regulators have not yet provided a timetable for when the “Bond Connect” would begin operation.