Tradeweb Markets Launches Block Orders for RMB Bonds

The marketplace operator was the first trading venue to connect to the Chinese government's Bond Connect system.

Tradeweb Markets (Tradeweb), a fixed income, exchange-traded-fund and derivatives marketplace operator, announced this Wednesday that its customers can now trade block orders of Chinese yuan (RMB) bonds.

The firm claims that this will strengthen their clients’ investment levels in the onshore Chinese bond market. Previously, the domestic Chinese bond market was difficult for investors to access.

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Wednesday’s announcement comes shortly after the China Central Depository & Clearing Co. (CCDC), a government-owned registration, depository and settlement services provider, stated that it will be providing real-time delivery-versus-payment to investors. Alongside this, there is a pending exemption on corporate income tax and value-added tax on foreign institutions’ interest gains from onshore bond investment.

Tradeweb and the CFETS

The China Foreign Exchange Trade System (CFETS), the forex and interbank trading division of China’s central bank, played a major role in enabling Tradeweb to offer the new block orders. This was done through the Bond Connect system.

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Launched in late 2017, Bond Connect was created by the CFETS and Hong Kong Exchanges and Clearing (HKEX). Through a market infrastructure link in Hong Kong, Bond Connect gives international investors the opportunity to trade in the Chinese bond market. Plans are in place to allow Chinese investors to trade in the international market but, thus far, this has not happened.

After its launch last year, Tradeweb became the first trading venue to be linked to Bond Connect. Clients of Tradeweb can now trade over 30,000 Chinese bonds on the China Interbank Bond Market (CIBM).

As you can imagine, this means that traders are not confined to investing in government bonds. Policy bank bonds, financial institution bonds, enterprise bonds and corporate debt instruments are all available to trade on the CIBM.

Lee Olesky, co-founder and CEO of Tradeweb, commented on Wednesday’s announcement: “We are confident that facilitating block orders in CNY bonds will allow investors greater flexibility to join the scheme, significantly boosting foreign investment into the Chinese domestic bond market.”

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