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China allows more banks to trade bonds through stock exchanges

The China Securities Regulatory Commission has allowed more banks to participate in bond trading on the two stock exchanges in China, as authorities aim to broaden financing channels for the real economy.

From Aug. 2, Chinese policy banks, large state-owned banks, joint-stock banks, city commercial banks, foreign banks with operations in China, banks listed on Chinese stock markets, as well as China Development Bank, are able to trade bonds via stock exchanges, the regulator said in an Aug. 6 statement.

The new regulation was an update to a pilot program announced in 2010 in which certain listed banks are able to participate in the exchange-traded bond market in China. The regulator did not disclose the names of these banks.

China's bond market has been dominated by the interbank market and supplemented by the exchange and over-the-counter markets.

As of July 31, 62.09 trillion yuan worth of bonds were in custody in China's bond market, of which 59.33 trillion yuan were in the interbank market, 17.32 trillion yuan were in exchange bond market and the remaining were in the OTC market and others, according to data from China Central Depository & Clearing Co. Ltd.

As of Aug. 6, US$1 was equivalent to 7.03 Chinese yuan.