People's Bank of China, Tentative Measures for the Administration of the Cooperation in Mutual Access between the Mainland and Hong Kong Bond Markets
中国人民银行内地与香港债券市场互联互通合作管理暂行办法
September 17, 2017 | BY
Susan Mok“Northbound Trading” is not without limits.
Promulgated: June 21 2017
Effective: as of date of promulgation
Applicability: For the purposes of these Measures, the term “cooperation in mutual access between the mainland and Hong Kong bond markets” means the institutional arrangement whereby domestic and foreign investors can trade bonds that are tradable on the Hong Kong and mainland bond markets through the link between financial infrastructure institutions of the two bond markets, namely, the “Bond Connect”, including “Northbound Trading” and “Southbound Trading”.
These Measures apply to “Northbound Trading”, which is the institutional arrangement whereby foreign investors from Hong Kong and other countries and regions invest in the mainland interbank bond market, through mutual access in trading, custody, settlement, etc. by Hong Kong and mainland Chinese financial infrastructure institutions.
The measures for “Southbound Trading” will be formulated separately (Article 2).
Main contents: The Tentative Measures remove the sentence: “There are no investment limits on “Northbound Trading””, as stated in the draft.
Foreign investors satisfying the requirements of the People's Bank of China may invest in the mainland interbank bond market through “Northbound Trading”. The subject bonds shall be any type of bond that trades on the mainland interbank bond market.
An electronic trading platform or other institution recognized by the People's Bank of China may carry out record filing with the Shanghai Head Office of the People's Bank of China on behalf of a foreign investor (Article 4).
A foreign investor may use its own renminbi or foreign exchange to invest. Where foreign exchange is used to invest, conversion of foreign exchange funds may be carried out through the bondholder's renminbi business settlement bank in Hong Kong or an offshore renminbi business participating bank in Hong Kong that has received approval to engage in trading on the domestic interbank foreign exchange market.
Where foreign exchange is used to invest, the proceeds derived from the invested bonds at maturity or upon sale thereof shall, in principle, be reconverted into foreign exchange and remitted abroad if no further investment is to be made (Article 10).
clp reference:3700/17.06.21 promulgated:2017-06-21 effective:2017-06-21This premium content is reserved for
China Law & Practice Subscribers.
A Premium Subscription Provides:
- A database of over 3,000 essential documents including key PRC legislation translated into English
- A choice of newsletters to alert you to changes affecting your business including sector specific updates
- Premium access to the mobile optimized site for timely analysis that guides you through China's ever-changing business environment
Already a subscriber? Log In Now