(Yicai Global) June 9 -- Southbound trading under a proposed bond connect scheme between the Chinese mainland and Hong Kong is unlikely to start for two years, Sina.com reported yesterday, citing Charles Li, chief executive of Hong Kong Exchanges and Clearing Ltd.
The time is needed for restrictions to be imposed before the bond connect is launched to ensure the comfort of Chinese regulators.
The report gave no further details.
More than two months have passed since Prime Minister Li Keqiang said at the press conference of the Meetings of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) in March that the bond connect will debut on a trial basis. China's central bank -- People's Bank of China (PBOC) -- published for public comment the Interim Measures for the Management of Bond Connect Between Mainland and Hong Kong Bond Markets (the draft) on May 31. The central bank solicited public opinions until June 7.
The bond connect will include northbound trading and southbound trading, the draft said. The draft only applies to northbound trading, however. Measures for southbound trading will be formulated separately.
International investors who meet PBOC's requirements may invest in all bonds traded and circulated on the interbank market via northbound trading, the draft said. Electronic trading platforms and other institutions PBOC recognizes may file with its Shanghai headquarters on behalf of overseas investors. No restriction will be placed on the amount foreign investors can use for northbound trading. They may buy bonds using their own yuan or foreign currency.
Northbound trading will allow overseas investors from Hong Kong and other countries or regions to invest in China's interbank bond market through mutual access between Hong Kong and the mainland's financial infrastructure for trading, custody and settlement.
Southbound trading will enable mainland investors to put their money into the Hong Kong bond market through mutual access between the financial infrastructure institutions of the two places.