China issues rules for managing foreign institutional investors’ funds in bond market

A worker counts yuan banknotes and US dollar banknotes at a branch of the Industrial and Commercial Bank of China in Huaibei, east China’s Anhui province. [Photo/IC]

BEIJING — China’s financial authorities have issued regulations aimed at optimizing fund management requirements for foreign institutional investors in the country’s bond market.

The regulations, effective from January 1, 2023, were issued jointly by the People’s Bank of China and the State Administration of Foreign Exchange to facilitate the opening of the domestic bond market.

The regulations set out unified requirements for the management of foreign institutional investors’ fund accounts, statistical monitoring, and the receipt, payment and exchange of funds.

They also optimized the management of foreign exchange cash settlements and sales, as well as refined the foreign exchange risk management policies.

Under the regulations, foreign institutional investors will have more currency hedging channels and the limit on the number of counterparties in OTC transactions will be removed.

The rules also make it easier for foreign institutional investors to transfer investment funds and aim to encourage long-term investment in the Chinese bond market.

Central bank sources said the regulations will provide more convenience for foreign institutional investors and increase the attractiveness of the Chinese bond market.

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