Chris Zhang,CAIA’s Post

China Securities Regulatory Commission's decision to suspend securities relending may have raised concerns, but experts believe the impact on institutional investors will be minimal. The onshore securities lending balance has dropped significantly this year, from CNY71.6 billion ($9.9 billion) to CNY31.8 billion ($4.4 billion), reflecting a shrinking market influenced by tighter regulations. Additionally, the daily trading volume of stocks sold through securities lending on the Chinese mainland market has decreased from 0.7% to 0.2%. Mutual funds' securities lending has also seen a notable reduction. However, alternative methods like direct lending agreements with major shareholders offer viable options for obtaining securities, lessening the disruption caused by the relending suspension. In essence, while the suspension of securities relending aligns with China's regulatory tightening, its effects on institutional investors are expected to be modest. The market has adapted to previous regulations, and investors have shown resilience. Regulators seem to tell retail investors that the market's short-selling power is weak, so feel confident about buying stocks.#China #stockmarket #regulators #shortselling #retailinvestors

The People's Bank of China officially released "the establishment of share repurchase and holding re-lending last Friday, over the weekend, there have been the first batch of 23 listed companies quickly responded. October 20 evening, these companies issued share repurchase or purchase announcements related to re-lending program.   The first mover is China Petroleum & Chemical Corporation (SINOPEC), the company's controlling shareholder, SINOPEC Group, signed a loan agreement with Bank of China, obtaining a credit line of CNY 700 million ($98.57 million), specifically for Sinopec Group to purchase Sinopec A shares (SH.600028) and increase its shareholding.   After the above loan is granted by the Bank of China, the bank may apply to the People's Bank of China for a refinancing loan. The People's Bank of China will provide refinancing at 100% of the principal amount of the loan. The initial total refinancing amount is CNY300 billion ($42.24 billion), with an interest rate of 1.75% per annum and a term of one year.   The vast majority of listed companies have disclosed that the annualized interest rate for loans is around 2.25%. If China's commercial banks can use this tool flexibly, they can actively support share buybacks and acquisitions by listed companies with good governance and prospects. This will benefit the whole capital market.#China #stockmarket #share #buyback #loans #centralbank

Optimizing Management of the Domestic Securities and Futures Investment Capital of Qualified Investors to Steadily Promote High-Standard Institutional Opening-Up of the Financial Market The amended Regulations contains the following key changes: 🗨  Simplified business registration rocedures.  The Regulations states that registration for QFII/RQFII businesses is completed by the principal reporter (custodian) through SAFE's ASOne platform. It also clarifies the rules for change of registered information and deregistration. 🗨  Optimized account management. The dedicated RMB deposit accounts for securities trading or derivatives trading are merged to reduce the number of accounts that need to be opened for various types of investment, with cost-saving effects. 🗨  Improved foreign exchange rules. The rules for cross-border capital flows of QFIIs and RQFIIs have been optimized, in particular the rules on which currencies can be transferred into and out of China, to make it easier for foreign institutional investors to invest in domestic securities. 🗨  Unified FX risk management model for QFII/RQFII and CIBM.  The Regulations permits QFIIs and RQFIIs to complete the spot purchase and sale of foreign currencies and FX derivatives transactions through a domestic financial institution qualified to provide such foreign-currency services or China’s interbank FX market, in addition to their custodians, on condition that such activities are based on bona fide transactions or hedging needs. #FX #riskmanagement #QFII #RQFII #CIBM #regulation

Bond Connect Flash Report for June 2024 - In June, the monthly trading volume was RMB 833.2 billion, and the monthly average daily turnover stood at RMB 43.9 billion. Chinese government bond and policy financial bond were the most popular bond types, accounting for 37% and 43% of the trading volume respectively. - In June,443 transactions were traded through the Northbound Swap Connect, with volume of RMB 256.141 billion. By the end of June, 63 overseas institutions were onboarded under Northbound Swap Connect. - ePrime Issuance Service successfully facilitated 11 issuances with total issue size of RMB 10.202 billion equivalent in June. Participating underwriters of this month, listed in alphabetical order, included Bank of China, China Securities International, CITIC Securities, Guotai Junan International, Huatai International, Orient Securities (Hong Kong), Shanghai Pudong Development Bank Hong Kong Branch, and TF International. - On 15 June, the latest round of enhancements for ePrime Issuance Service was launched. New Enhancement features included access management, order filter, orderbook UI customization, quick order edit, password reset, etc. - PMIP disclosed the pre- and post-issuance information of 69 primary bonds in June. Stay tuned for more updates and upcoming events. Subscribe to us now: https://lnkd.in/g-icFkjh Regarding the applicable disclaimer for posts on LinkedIn, please refer to our company website: https://lnkd.in/gYnQzuym #BondConnect #BCCL #ChinaBond #FlashReport

[KH Explains] [Banks puzzled by derivatives misselling proposal] Absence of court involvement ‘exceptional’ for Korea, experts say South Korean regulators’ push for banks to make up for investors’ losses incurred from equity-linked securities tied to a Hong Kong index has left both Korean and foreign banks baffled. Korea's major lenders accepted compensation guidelines suggested by financial watchdog the Financial Supervisory Service last month, agreeing to partly redress investors for the losses from the ELS products. The payback scheme is expected to cost around 2 trillion won ($1.47 billion) in total for the lenders, as it covers some 40 percent of the 5 trillion won investment losses from the ELS products that face maturity in the first seven months of this year. While 신한은행 and 하나은행 have already started to hand out compensation, KB Kookmin Bank, a top seller of ELS products among local banks, announced it would start the compensation process next Monday. Tap below to read full story. #bank #commercial #ELS #FSS #compensation #investment #misselling #HongKongindex https://lnkd.in/gPsDVGse

Bond Connect Flash Report for April 2024 - Have a look at the strong performances highlighted below: · In April, the monthly trading volume was RMB 896.8 billion, and the monthly average daily turnover stood at RMB 40.8 billion. Chinese government bond was the most popular bond type, accounting for 60% of the trading volume. · ePrime Issuance Service successfully facilitated 19 issuances with total issue size of RMB 21.53 billion equivalent in April including China Development Bank Hong Kong Branch‘s dual-tranche 3 and 5 year offshore RMB Belt and Road Themed issuance on 16 April, totaling 2.8 billion. Participating underwriters of this month, listed in alphabetical order, included Bank of China*, Bank of Communications, BOCOM International, China Industrial Securities International, China International Capital Corporation, China Securities International, CITIC Securities, CMB International, Guotai Junan International, Huatai International, ICBC International, Industrial Bank Hong Kong Branch, and TF International. · BCCL hosted the ePrime Issuance Service Enhancements Update and Industry Consultation Event on 26 April, where BCCL shared the latest progress of ePrime Issuance Service and upcoming product developments. Participants also actively engaged in discussions on book-building, industry trends as well as feedback on future developments. · On 10 April, BCCL and MarketAxess jointly hosted a Trader’s Table, inviting guests from banks, security firms and asset managers to discuss latest updates on electronic trading, data analysis, and cross-border initiatives such as Swap Connect and Repo. · On 17 April, Bond Connect series event featured Ping An Asset Management on “Seizing Opportunities in 2024: A Sharing on China's Macroeconomic Outlook and Bond Index Enhancement Strategies”, delving into China’s microeconomic outlook, investment dynamics in Chinese bond market, and practical application of bond index tracking and index enhancement strategies. · PMIP disclosed the pre- and post-issuance information of 92 primary bonds in April.   *Bank of China includes Bank of China Limited, a joint stock company incorporated in the People’s Republic of China with limited liability, and Bank of China (Hong Kong) Limited. Stay tuned for more updates and upcoming events. Subscribe to us now: https://lnkd.in/g-icFkjh Regarding the applicable disclaimer for posts on LinkedIn, please refer to our company website: https://lnkd.in/gqhBSHb3 #BondConnect #BCCL #ChinaBond #FlashReport

United States CFTC fines Taiwan Taishin Securities $200,000 for trader executing $17 million of futures via 50 wash trades & non-competitive transactions in 2022 on Chicago Mercantile Exchange, with the trader reaching internal trading limits with the 1st broker & transferred positions to 2nd broker, and placed offsetting futures orders with same delivery month & same price which minimised market competition.  Read - https://lnkd.in/gbPPqrNk follow Caproasia | Driving the future of Asia The United States Commodity Futures Trading Commission (CFTC) has fined Taiwan Taishin Securities $200,000 for a trader executing $17 million of futures via 50 wash trades & non-competitive transactions in 2022 on Chicago Mercantile Exchange, with the trader reaching internal trading limits with the 1st broker & transferred positions to 2nd broker, and placed offsetting futures orders with same delivery month & same price which minimised market competition.  United States CFTC (1/10/24): “The Commodity Futures Trading Commission today issued an order filing and settling charges against Taishin Securities Co., Ltd., a Taiwanese financial services company, for engaging in wash sales and non-competitive transactions on the Chicago Mercantile Exchange.  The order requires Taishin to pay a civil monetary penalty of $200,000 and to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations, as charged.  Case Background – According to the order, Taishin engaged in multiple wash sales and non-competitive transactions while moving open futures positions it held from one broker to another broker.  Specifically, the order finds that in or around October 2022, a Taishin trader reached internal trading limits with the first broker and decided to transfer futures positions to Taishin’s account at the second broker. To make this transfer, the trader placed offsetting orders for the purchase and sale of the same delivery month of the same futures contract at the same price on the Chicago Mercantile Exchange with the intent that some or all of those orders would offset, knowing that the timing and structure of those orders would minimize market competition. In so doing, Taishin negated the risk or price competition incidental to an open and competitive marketplace. In total, the trader executed 50 wash trades between October and December 2022 encompassing 175 contracts with a value of approximately $17 million.”

United States CFTC fines Taiwan Taishin Securities $200,000 for trader executing $17 million of futures via 50 wash trades & non-competitive transactions in 2022 on Chicago Mercantile Exchange, with the trader reaching internal trading limits with the 1st broker & transferred positions to 2nd broker, and placed offsetting futures orders with same delivery month & same price which minimised market competition.  Read - https://lnkd.in/grGFVJt7 follow Caproasia | Driving the future of Asia The United States Commodity Futures Trading Commission (CFTC) has fined Taiwan Taishin Securities $200,000 for a trader executing $17 million of futures via 50 wash trades & non-competitive transactions in 2022 on Chicago Mercantile Exchange, with the trader reaching internal trading limits with the 1st broker & transferred positions to 2nd broker, and placed offsetting futures orders with same delivery month & same price which minimised market competition.  United States CFTC (1/10/24): “The Commodity Futures Trading Commission today issued an order filing and settling charges against Taishin Securities Co., Ltd., a Taiwanese financial services company, for engaging in wash sales and non-competitive transactions on the Chicago Mercantile Exchange.  The order requires Taishin to pay a civil monetary penalty of $200,000 and to cease and desist from further violations of the Commodity Exchange Act and CFTC regulations, as charged.  Case Background – According to the order, Taishin engaged in multiple wash sales and non-competitive transactions while moving open futures positions it held from one broker to another broker.  Specifically, the order finds that in or around October 2022, a Taishin trader reached internal trading limits with the first broker and decided to transfer futures positions to Taishin’s account at the second broker. To make this transfer, the trader placed offsetting orders for the purchase and sale of the same delivery month of the same futures contract at the same price on the Chicago Mercantile Exchange with the intent that some or all of those orders would offset, knowing that the timing and structure of those orders would minimize market competition. In so doing, Taishin negated the risk or price competition incidental to an open and competitive marketplace. In total, the trader executed 50 wash trades between October and December 2022 encompassing 175 contracts with a value of approximately $17 million.”

China’s Bond Connect to Slash Fees by 60%, Most Since Launch https://lnkd.in/guVr7h7j Bond Connect Company Limited (BCCL) will reduce its service fees by 60% starting January 1, 2025—the largest reduction since the program's inception in 2017 and the fourth overall. Fees for bonds with a remaining term of one year or less will decrease from 0.0015% to 0.0006% of the nominal value, while those with terms exceeding one year will drop from 0.0030% to 0.0012%. This move aims to lower transaction costs for overseas investors and enhance the efficiency of the Bond Connect mechanism, which has seen significant growth, with over 800 investors from nearly 40 jurisdictions and a record average daily trading volume of RMB 43.1 billion in the first ten months of 2024.  #China #Hongkong #Chinaeconomic #Policy #Bondconnect #Bond #Crossborder #Finance #InvesTAODigest

Bond Connect Flash Report for July 2024 - In July, the monthly trading volume of Northbound Bond Connect was RMB 1,057.0 billion, with an average daily turnover of RMB 46.0 billion for the month. Policy financial bond and Chinese government bond were the most popular bond types, accounting for 43% and 35% of the trading volume respectively.   - In July, 572 transactions were traded through the Northbound Swap Connect, with volume of RMB 300.74 billion. By the end of July, 63 overseas institutions were onboarded under Northbound Swap Connect.   - ePrime Issuance Service successfully facilitated 13 issuances with total issue size of RMB 17.143 billion equivalent in July. Participating underwriters of this month, listed in alphabetical order, included Agricultural Bank of China Limited Hong Kong Branch, Bank of China, China Industrial Securities International, China International Capital Corporation, China Securities International, CITIC Securities, CMB International, CNCB Capital, Guotai Junan International, Haitong International, Huatai International, ICBC International, Industrial Bank Co., Ltd. Hong Kong Branch, Orient Securities (Hong Kong), and Shanghai Pudong Development Bank Hong Kong Branch.   - ePrime Northbound Subscription Service facilitated offshore investors’ cross-border subscription of FITS Jianpu 2024-3 Small and Micro Business Loan Asset-Backed Securities on 16 July. The Asset-Backed Securities had a total issuance amount of RMB 11.2 billion. The seamless connectivity between ePrime and iDeal (the Bond Issuance, Underwriting and Distribution system of CFETS) allowed offshore investors to successfully complete their online subscriptions, which encompassed order placement, allocations, and the generation of confirmation tickets.   - Bond Connect Anniversary Summit 2024 was held on 9 July to celebrate the 7th anniversary of Bond Connect.   - PMIP disclosed the pre- and post-issuance information of 86 primary bonds in July, including policy financial bonds and financial bonds. Stay tuned for more updates and upcoming events. Subscribe to us now: https://lnkd.in/g-icFkjh   Regarding the applicable disclaimer for posts on LinkedIn, please refer to our company website: https://lnkd.in/gSftzKCw #BondConnect #BCCL #ChinaBond #FlashReport