(Yicai) Jan. 3 -- China’s central bank has concluded its second swap facility operation aimed at funding share purchases by non-bank financial institutions, increasing the value of assets exchanged with brokerages, fund companies, and insurers to CNY55 billion (USD7.5 billion).

Twenty financial institutions took part in the latest swap operation, the People's Bank of China said yesterday, with a fee rate of 10 basis points, lower than the previous 20 basis points.

This time the PBOC also allowed them to use restricted shares, stocks held under the Hong Kong Stock Connect mechanism, and other assets, thereby widening the range of eligible collateral, participants told Yicai.

In the first operation of the Securities, Funds and Insurance Companies Swap Facility, the PBOC exchanged CNY50 billion of assets on Oct. 21 with 20 brokerages, fund companies, and insurance firms.

This new monetary policy tool allows eligible non-bank financial institutions to exchange various assets, including bonds, stock exchange-traded funds, and holdings in CSI 300 Index constituents, for highly liquid assets such as treasury bonds and central bank bills, thereby securing funds to invest in the stock market.

The PBOC has initially made CNY500 billion (USD70.2 billion) available in tranches through the SFISF, with the possibility of a second and third round also of CNY500 billion each if the project is successful. “We are taking an open attitude towards the new policy,” PBOC Governor Pang Gongsheng said in September, when the SFISF was unveiled.

The China Securities Regulatory Commission also announced on Dec. 31 that following evaluation and compliance checks, the PBOC and the securities watchdog had expanded the pool of eligible institutions to 40 from 20.

Experts noted that the bigger scale and lower costs of the SFISF should attract more participants, potentially bringing additional capital into the market.

Editors: Tang Shihua, Emmi Laine