Background:

At MarketAxess, I wrote this article as the second article of a go-to-market campaign for MarketAxess' re-entry into the Chinese onshore bond market. This piece constitutes a year-long strategic campaign, including a partnership with the International Capital Market Association (ICMA), an email campaign, and a WeChat social campaign.

Format: 

Blog article, email copy

Published 22 April 2024 here

Bridging borders: How innovation and collaboration are shaping the Chinese bond market

I recently had the privilege of attending the China Bond Market Forum in Beijing, hosted by the International Capital Market Association (ICMA). The forum served as a melting pot for fixed income experts from across the region, and delved into how innovation is pivotal in navigating the challenges and opportunities within China’s evolving bond market.

Innovation opening doors

The discussions covered a wide range of topics; a significant one being the role that recent innovations are playing to facilitate the continuous opening of China’s bond market to international investors. Notably, the dialogue highlighted:

1. Hong Kong’s strategic role: The city’s role in bridging international and Chinese bond markets was underscored, emphasizing its efforts in integrating Chinese onshore bonds into global bond indices.

2. The power of data: The critical role of data as the foundational infrastructure for all major innovations in the fixed income market was a recurring theme, pointing towards a future where data-driven decisions become even more paramount.

Regulatory developments and market sentiment

Despite rising interest rates and heightened geopolitical tension dampening market sentiment, many participants pointed out the steadfast commitment of Chinese regulators to further open the country’s onshore bond market to foreign financial institutions. This is underscored by a pair of new developments this year:

1. In January, the National Association of Financial Market Institutional Investors (NAFMII) granted licenses to six foreign banks, enabling them to function as lead underwriters for new debt issuances within China.

2. Later this year, some of China’s largest banks are set to issue Total Loss Absorption Capital (TLAC) bonds, aligning with global capital requirements.

Hong Kong: The conduit for connectivity

The forum also delved into how Hong Kong continues to serve as an important conduit, deepening the connection between the international and the Chinese bond market. Innovative initiatives like Bond Connect, now accessible via the MarketAxess platform, has opened new avenues for foreign investors to access the Chinese interbank bond market—the second largest in the world. 

Looking ahead, Hong Kong is set to further solidify its role by strengthening tools designed to meet bond investors’ risk management needs. Examples include the Swap Connect, launched last year with the aim of helping investors mitigate rate risks. Additionally, in a significant move this January, the People’s Bank of China (PBOC) and Hong Kong Monetary Authority (HKMA) jointly announced that it would further open the onshore repurchase agreement (Repo) market to foreign institutional investors and expend the list of eligible RMB Bonds for HKMA's RMB Liquidity Facility. This comes as part of the country’s new measure to strengthen financial links between Hong Kong and the Mainland, as well as to further contribute to the internationalization of the Chinese Yuan (CNY).

The path forward: Embracing innovation and collaboration

The importance of data in the evolution of China’s fixed income market was center of many conversations. To highlight this, when asked for key words to define the improvement of the Chinese bond ecosystem, panel speakers at the session “Market Integrity and Sustainable Finance” responded with data, standard, transition. 

These discussions made it abundantly clear: the path forward for China's bond market is paved with innovation and international collaboration. As China’s bond market continues to grow in both size and influence within the broader global market, so does the importance of technology innovation and adoption.

Fostering growth through technology

This is where MarketAxess sits in this ecosystem. For the last 20 years, we stand at the forefront of leveraging technology to bridge gaps between global bond markets, providing the most comprehensive and global trading solutions for 28 emerging market local currency bonds. By integrating Bond Connect and CIBM-Direct into our platform, we have provided seamless access for global investors seeking CNY-denominated bonds. 

Our commitment to innovation doesn't stop here; we're constantly exploring how we can bring our cutting-edge technologies—like AI-driven analytics and automated trading tools—to further enhance the accessibility and efficiency of global bond markets. These efforts are underpinned by a wealth of data, including insights from MarketAxess TraX data, platform trading data, and public TRACE data, ensuring that our solutions are both innovative and grounded in real-time market dynamics. Moreover, our technology has revolutionized how global investors find liquidity. Open Trading®, our all-to-all marketplace, has become essential for cross-border liquidity access, allowing investors to connect with a diverse range of trading counterparties anytime, anywhere, and further exemplifying our dedication to creating a more interconnected and efficient global financial ecosystem.

We continue to innovate in ways that not only enhance market efficiency but also foster deeper integration within the global financial ecosystem. Our efforts are aligned with the broader trends and initiatives discussed at the forum, from supporting regulatory developments to leveraging data as the backbone of our platform's capabilities.

A call to action for future collaboration

Huge strides have been made in China’s onshore bond market in recent years. With the country’s strong commitment towards greater openness, strategic initiatives from Hong Kong, along with technology advancements from partners like MarketAxess and industry support from associations like ICMA, the market is becoming more accessible and dynamic for foreign investors. 

As we work to transform how the Chinese bond market grows and integrates into the global financial ecosystem, we are proud to be a crucial partner to regulators, investors and a global network of market participants. Let's continue to engage, innovate, and collaborate as we navigate this dynamic journey together, leveraging the best that technology can offer to foster connectivity and efficiency across borders.

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Subject: How is the innovation and collaboration for the Chinese bond markets?

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Navigating the next era of China’s bond markets

With China’s commitment towards greater openness, strategic initiatives from Hong Kong and innovative technology advancements in recent years, the Chinese bond market is becoming more accessible and dynamic for foreign investors.

Following the recent China Bond Market Forum, hosted by the International Capital Market Association, Cathy Cai, Senior Sales Relationship Manager at MarketAxess, shares key highlights from the forum in her latest piece and discusses how innovation is pivotal in navigating the challenges and opportunities within China’s evolving bond market. 

Read the article to learn more about the recent initiatives that are opening the Chinese bond markets to global market participants and how you can leverage the best that technology can offer to foster connectivity and efficiency across borders.

READ THE ARTICLE →

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Huge strides have been made in China’s onshore bond market in recent years —from the country’s commitment towards greater openness to strategic initiatives from Hong Kong and innovative technology advancements. In our latest piece, Cathy Cai, Senior Sales Relationship Manager, shares the latest developments in the #ChineseBondMarkets and discusses how innovation is pivotal in navigating the challenges and opportunities within this market. How is innovation and collaboration shaping the Chinese bond market to become more accessible and dynamic for foreign investors? Read the article to find out.

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