DBS to be first Singapore bank to act as settlement agent for China bonds

Singapore

DBS Bank will be granted a settlement agent licence by the People's Bank of China (PBOC) that will permit Singapore's largest bank to trade, settle and provide custody for China's interbank bond market instruments on behalf of foreign investors, the Monetary Authority of Singapore (MAS) said on Tuesday.

This will make DBS the first and only Singapore bank to hold this licence, broadening its access to a US$13 trillion Chinese onshore-bond market that is also the third-largest bond market globally.

DBS will hold a Type-A licence, which will allow it to act as a bond settlement agent and custodian in the Chinese interbank bond market, in addition to conducting trades. Such a licence is typically held by large global banks. By comparison, Type-B and Type-C licences do not permit custodial services.

A DBS spokesperson said: "DBS is committed to leveraging on our regional connectivity, and to providing a holistic suite of services to international institutional clients, including introducing long-term qualified investors to the inter-bank bond markets."

MAS and the PBOC will also cooperate to enable other designated Singapore and Chinese banks to offer custody and trading services for regional and global investors in China's bond market.

MAS said it is in discussions as well with the China Securities Regulatory Commission to enhance capital market connectivity. They have agreed to strengthen cross-border supervisory cooperation to promote the "healthy and stable" development of the securities and futures markets.

The moves are part of new initiatives forged between Singapore and China as they look to expand the reach of financial institutions in each other's markets.

MAS said the new initiatives were broached to strengthen capital market activities between Singapore and China during the 15th Joint Council for Bilateral Cooperation between the two countries.

The council is co-chaired by Singapore Deputy Prime Minister and Minister for Finance, Heng Swee Keat, and Chinese Vice-Premier Han Zheng.