All members of the interbank bond market,

In an effort to make China’s interbank bond market more accessible for overseas institutional investors to invest and accommodate the trading needs of bond index investors, China Foreign Exchange Trade System & National Interbank Funding Center (CFETS) will offer closing order trading services to overseas institutional investors, allowing them to trade cash bonds by using the closing bond valuation as the quote benchmark, starting from November 29, 2021. Details are as follows:

1.       Eligible Participants

Overseas institutional investors recognized by the People’s Bank of China may participate in closing order trading service without additional application for access. This service will initially be available to overseas institutional investors adopting the Client Pay Model under Bond Connect, and will be extended to cover other investment channels and payment models based on market demand, which is subject to further notice.

2.       Business Arrangements

(1) Trade Mechanism

An overseas institutional investormay, based on the quote benchmark, send a spread quote request to an onshore dealer, who may reply to the request through CFETS trading system with a tradable spread quote based on the quote benchmark. Once the spread is confirmed, the overseas institutional investor can conclude the trade in the CFETS trading system. After the daily quote benchmark is updated, the CFETS trading system calculates the corresponding yield to maturity, net price, and settlement amount, updates the complete transaction information, and generates the deal ticket. Overseas electronic trading platforms may be connected to the CFETS trading system to facilitate trading by overseas institutional investors. CFETS reserves the right to adjust or expand the trading methods and applicable channels of closing order trading service in light of market conditions, as well as offer spread quote requests at its discretion.

(2) Applicable Bond Types

Closing order trading service is applicable to treasury bonds, local government bonds, policy financial bonds, and other types of bonds traded in the interbank bond market, except for asset-backed securities, asset-backed notes, private placement notes (PPNs), option-embedded bonds, and special cash bonds.

(3) Applicable Quote Benchmark

In the initial stage, CFETS Closing Bond Valuation yield (%) will be used as the quote benchmark, and the spread should be quoted in 0.01BP. CFETS may adjust the quote benchmark range according to market conditions.

(4) Trading Hours and Update Time of Transaction Information

Trading hours are 9:00 a.m. to 12:00 p.m. and 1:30 p.m. to 5:00 p.m. Beijing Time. Any changes to trading hours will be subject to CFETS notice.

The CFETS trading system will calculate and update relevant transaction information starting from 7:00 p.m. Beijing time. After the transaction information is updated, CFETS trading system supports the download and printing of the deal tickets and releases the transaction details through CSTP.

After the spread-based transaction is concluded, the relevant transaction information will be recorded in tick data; after the transaction information is calculated and completely updated, the relevant transaction information will be recorded in the cumulative market statistics.

(5) Other Basic Rules

The minimum volume of request for quote for a single trading account is RMB 10,000, and the minimum variation unit is RMB 10,000. Closing order trading service offers pre-allocation and list trading. Gross settlement on a Delivery-versus-Payment (DVP) basis and a settlement cycle of T+1 or above are available for use.

Other arrangements not covered herein will be governed by the relevant provisions and requirements for overseas institutional investors’ participation in the interbank bond market.

For business consulting, contact:

SUN Dan (021) 2069 3721

ZHANG Yajun (021) 3858 5346

National Interbank Funding Center

November 26, 2021