(Yicai) Oct. 22 -- The People's Bank of China has conducted the first operation of the Securities, Funds and Insurance Companies Swap Facility, with a scale of CNY50 billion (USD7 billion) to better leverage the role of financial institutions in stabilizing the country's capital market.

The first operation will adopt a swap rate tender, with 20 institutions participating in the bidding and a winning bid rate of 20 basis points, China's central bank announced yesterday.

China International Capital Corporation reached the first pledge-style repo deal under the SFISF on the same day, with the pledged securities being this year's first tranche of swap facility central bank notes. The investment management and financial services firm will continue to implement the central deployments, play a role in stabilizing the market, and fully support the implementation of macro policies, it said.

Implementing the swap tool will play a key positive role in keeping the market's long-term stable operation in the medium to long run, as it helps introduce large-scale funds from the institutional end to the capital market to carry out anti-cyclical adjustments, said Yao Zeyu, chief analyst for non-banking finance and fintech sector at CICC. It also injects confidence into the market and boosts activity, Yao added.

On Oct. 18, the PBOC and the China Securities Regulatory Commission issued a notice to clarify the SFISF business process, key operating elements, rights and obligations of the two sides involved in transactions, and other details to all SFISF participants. Some 20 brokers and fund managers have been approved to take part in the swap tool operations so far, with the first batch of application quotas exceeding CNY200 billion (USD28.1 billion).

The PBOC launched the SFISF, China's first monetary policy tool specifically aimed at supporting the stock market, with an initial CNY500 billion (USD70.2 billion) on Oct. 10. The new mechanism is part of a big economic stimulus package unveiled last month and is intended to support the "healthy and stable development of the capital market," the bank added.

Editors: Xu Wei, Martin Kadiev