Standard Chartered becomes first foreign bank to trade bond futures in China
STANDARD Chartered’s China unit has become the first foreign bank to trade treasury bond futures in the world’s most populous country, it said on Wednesday (Jan 4).
The move comes as China steps up efforts to draw global investors after months of foreign money outflows from its US$20 trillion bond market.
Standard Chartered Bank (China) said that, with the permission of regulators, it completed its first treasury bond futures transaction in the country. Treasury bond futures are a key tool to manage interest rate risks.
China’s deregulation of the market will allow foreign investors to better participate in its onshore bond market and promote yuan internationalisation, the bank said.
Standard Chartered Asia chief executive Benjamin Hung said the bank believes “that the depth and breadth of global investors’ participation in China’s capital market will continue to increase”, as more comprehensive risk management tools become available.
Overseas institutional investors dumped a net 740 billion yuan (S$114 billion) worth of Chinese bonds during a 10-month streak of outflows, amid geopolitical tensions, worries about China’s economy, and US interest rate premiums over the East Asian power.
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Foreign holdings of yuan-denominated bonds traded on China’s interbank market stood at 3.33 trillion yuan at the end of November, less than 3 per cent of the total market size.
Standard Chartered’s bond futures trading came nearly three years after China freed up banks and insurers to participate in the market for the first time in early 2020. It had then selected its top five banks for an initial pilot scheme.
Jerry Zhang, vice-chairman of the bank’s China unit, said: “China’s unwavering efforts towards expanding its opening up, especially the continuous opening up of the financial markets at a high standard, provides tremendous opportunities for Standard Chartered.”
In February 2022, Standard Chartered said it would invest US$300 million in China-related businesses over the next three years and double the relevant profit contribution by the end of 2024. REUTERS
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