Euroclear targets cross-border link for China’s bond market

The two institutions will also explore opportunities to provide cross-border collateral management services for RMB-denominated securities.

By Joe Parsons

Euroclear has signed a memorandum of understanding (MOU) with the China Central Depository & Clearing (CCDC) to promote cross-border services for its bond market.

The collaborations is aimed to working towards enhanced cross-border services and establishing a link to support the opening of the Chinese Interbank Bond Market (CIBM).

The two institutions will also explore opportunities to provide cross-border collateral management services, which will aim to promote the use of renminbi-denominated securities as collateral in the international financial market.

“This MOU is a strong first step towards our goal of easing access for investors to the China Interbank Bond Market without changing the way they access other markets,” said Ruqing Shui, chairman of CCDC.

“With our cooperation, there is possibility that RMB assets can be used as eligible collateral in more business scenarios, to enrich the collateral pool of global investors when they experience HQLA shortage.”

The link will seek to simplify the process for foreign investors acting the CIBM, and bring China’s cross-border settlement mechanism in line with global standards.

“This [MOU] signifies a true commitment towards opening a cross-border link and  explore new opportunities which will benefit the global capital markets. This partnership further underpins our wider Asia strategy which spans nearly 30 years in the region,” added Valerie Urbain, CEO Euroclear Bank.

Earlier this year, Euroclear established a partnership with Hong Kong Exchange and Clearing (HKeX) to enhance the distribution of European-domiciled exchanged traded funds (ETFs) in Asia.

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