IHS Markits Debuts Onshore Chinese Bond Indices
Business information provider IHS Markit has launched its onshore Chinese bond market indices in alliance with ChinaBond Pricing Center Co., Ltd., a subsidiary of China Central Depository and Clearing Co., Ltd., the leading pricing provider for the world’s third largest fixed income market.
The new iBoxx ChinaBond indices are the first international, independent fixed income benchmarks using CBPC pricing data, the gold standard in Chinese domestic bond valuations. As the administrator of the indices, IHS Markit will apply its globally-recognized methodologies and maintain them in compliance with IOSCO and European Benchmark Regulation (BMR) standards.
“Partnering with CBPC allows us to develop bond market indices that are unique for their ability to draw on domestic China market data and expertise,” said Shane Akeroyd, president of IHS Markit Asia. “Together, we are confident that we are offering the strongest benchmarks for the onshore Chinese bond market. Bringing our iBoxx methodologies and independence to China will help mutual funds, ETFs and international investors access this large and growing market.”
“These are the first globally-branded onshore Renminbi bond indices, combining iBoxx methodologies with CBPC bond pricing to deliver authoritative performance indicators for investors across the world,” said Bai Weiqun, Chief Supervisor of CCDC and Chairman of CBPC. “As more international investors see opportunities in China, there is a growing need for new and reliable benchmarks, and we are delighted to provide fund managers with these valuable tools for accessing one of the world’s fastest growing markets.”
The first set of indices, the iBoxx ChinaBond Government & Policy Banks Bond Indices, capture the performance of the government and government agency segment of the Chinese domestic bond market. Together, these issuers represent about one quarter of the Chinese bond market. 48 sub-indices by issuer type, issuer and maturity complement the headline index.
In recent years, the Chinese government introduced CIBM Direct and Bond Connect to make it easier for foreign investors to access its bond market. More than 300 offshore financial institutions have invested through the CIBM Direct program, and by the end of August 2018, offshore investors held 1.75 trillion RMB of Chinese bonds. Foreign demand is expected to grow over the next decade, as China continues to open its bond market.
Electronification of the municipal bond market also presents a large opportunity.
The success of Northbound trading showed electronic execution is way forward for the bond market.
IRS trading volumes have fragmented without an equivalence agreement.
Increased electronification has created useable and accessible real-time and historic trade data.
Members are evaluating payment-versus-payment for currencies not yet eligible for CLSSettlement.