Northbound Bond Connect

Overview

Under the Northbound settlement link, the Central Moneymarkets Unit (CMU) has opened nominee accounts with two Mainland central securities depositories (CSDs), namely the China Central Depository & Clearing Co., Ltd (CCDC) and Shanghai Clearing House (SHCH), to settle Bond Connect transactions and hold China Interbank Bond Market (CIBM) bonds on behalf of CMU members for their overseas investor clients using Bond Connect.

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Northbound Trading follows Mainland China's current policy framework governing overseas participation in the CIBM and at the same time respects international norms and practices.

There is no investment quota for Northbound Trading.

Eligible Securities

The scope of eligible securities is specified in the relevant notices promulgated by PBoC. It currently covers all bonds tradable in the CIBM.

CMU members may enquire issue details of the eligible securities already accepted by the CMU system via their CMTs or view it here.

How Can Offshore Investors Participate in the Bond Connect Scheme

Eligible investors should open an account with the CMU if they fulfil the eligibility criteria for CMU Membership or engage with a global/local custodian who is a CMU member, and submit the application forms to Bond Connect Company Limited (BCCL) for onboarding. The qualified applications will then be submitted to CEFTS and PBoC for pre-filing. Upon completion, investors are ready to trade through recognised trading access platforms*.

Click here to view the CMU member list.

For eligibility and detailed application process, please refer to BCCL website. 

*Recognised trading access platforms are Tradeweb, Bloomberg and MarketAxess.

Rules and Policy Related to Northbound Trading

Investors may refer to the BCCL website for information from on boarding requirements to all Northbound Trading Rules, as well as the latest policy update.

Benefits for Offshore Investors Accessing CIBM Through Bond Connect

• Using international trading and settlement practice to access CIBM.  Eligible offshore investors can trade directly through recognised offshore international trading platforms and settle through their existing global and local custodian arrangements. Bonds are held through the nominee accounts opened by CMU in Mainland with SHCH and CCDC, no onshore presence is required for investors.
• Account opening process is streamlined and the approval turnaround time is by far the shortest among all access channels.
• Operational efficiency is enhanced. CMU's automated operation and reporting service tailored made for Bond Connect investors make the flow of funds and information to investors more efficiently.
• Investors have the flexibility to choose to use offshore RMB or foreign currencies for settlement.

Onshore Market Makers

Please click here to view the list of market makers on the BCCL website.

Settlement

Settlement Method

Settlement of transactions in the CCDC and SHCH system is effected in DvP mode, in real time and on gross basis.

Settlement Currency

Bonds are settled in Renminbi in CCDC and SHCH. For foreign currencies, foreign exchange (FX) conversion has to be done via Hong Kong FX Settlement Banks authorised by CEFTS before remitting the Renminbi proceeds to CIPS for further settlement.

Settlement Cycle

Ranged from T+0, T+1, T+2 or T+3 and T+N where N is any number of days supported by the relevant Mainland CSDs.

Settlement Calendar

Settlement calendar (including working Saturdays/Sundays) and holiday arrangements will generally follow the CIBM schedule. The Linkage Service is available on a day when the CCDC system, CIPS and the RMB CHATS are all open for business, regardless of whether it is a holiday in Hong Kong. Public holiday arrangement in Mainland China is announced by the People's Republic of China from time to time which is available at its website: http://www.gov.cn/zhengce.

Given the public holidays are announced at the start of each year, relevant Mainland authorities and/or CSDs may also announce special working days, including Saturdays and/or Sundays, as ad hoc working days for CIBM and/or Bond Connect settlement days. 

Corporate Actions

The CMU supports all types of CA services for Bond Connect CMU members.

Tendering of Primary Issues

To facilitate overseas investors to participate in the tendering of primary issues in SHCH, CMU members who subscribed to the Bond Connect services can submit tender applications for eligible investors through the CMU.