(Yicai Global) Feb. 15 -- China's central bank has initially approved that five domestic lenders, including the Industrial and Commercial Bank of China, may start brokering promissory notes to standardize processes in the bills of exchange market and provide business for the country's centralized commercial paper trading platform.

The People's Bank of China has issued a list of entities that can join the pilot, including the three joint-stock banks of China Merchants Bank, Shanghai Pudong Development Bank and Bank of Jiangsu, as well as the one commercial bank of China Zheshang Bank, the Bank of Jiangsu said in a statement yesterday, adding that it will set up a related division.

The move will promote the development of the Shanghai Commercial Paper Exchange, while compressing bill brokers' business scope, online news outlet Jiemian reported yesterday, citing a market insider.

China's market of these transferable debt instruments has been beset with fraud in recent years. In 2016, one broker colluded with personnel at the Beijing branch of the Agricultural Bank of China, which led to misappropriation of bills worth CNY3.9 billion (USD577 million).

The PBOC established the Shanghai Commercial Paper Exchange, involved in trading of banks' acceptance bills and commercial acceptance bills, in December 2016 to systemize the related market. 

Editor: Emmi Laine