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INVESTMENT BANKING | Staff Reporter, China

Citi China gets go-ahead to act as a bond settlement agent in the China Interbank Bond Market

It's the first and only American bank to be granted such a license.

Citibank (China) Co., Ltd. ("Citi China") announced that it has received its Type A Bond Settlement Agent license from the People’s Bank of China (“PBOC”) to act as a bond settlement agent in the China Interbank Bond Market (“CIBM”). 

Christine Lam, President and Chief Executive Officer of Citi China, said: “China’s bond market is exciting and dynamic as China accelerates the internationalization of RMB. Citi has been trading in the CIBM market for more than ten years, and is currently one of the most active market makers. With this newly added capacity to serve as a bond settlement agent and custodian, Citi China will continue to offer a best-in-class platform for our clients globally.”

“We are proud to be the first and only American bank with a Type A Bond Settlement Agent license in China,” commented Harry Peng, Head of Securities Services for Citi China. “Combining our leading global emerging markets FX and rates trading franchise with our on-the-ground custody network in more than 60 markets, Citi will be able to deliver a complete front-to-back China fixed income solution through the life cycle of a trade, from research, sales and trading to custody, clearing and settlement.”

The Chinese bond market has grown more than six fold since 2005 to become the third largest in the world by outstanding issuance. As of December 2016, the total value of bonds outstanding reached RMB 64.27 trillion (USD 9.3 trillion)[1].

In October 2015, the International Monetary Fund announced the inclusion of RMB as the third largest currency into the Special Drawing Rights currency basket with 10.92% weighting. PBOC started a pilot program for CIBM in 2010 for limited types of investors and introduced new rules in 2015 and 2016 to broaden foreign access to the CIBM by expanding both eligible investors and investable products. It is now generally possible for most qualified types of foreign investors to access this market with a registration-only mechanism.   

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