Two Chinese money brokers said they would guarantee anonymity in the bond-quoting process, after traders said some in the market had been avoiding state-owned banks as trading counterparties amid fears of regulatory scrutiny over reckless bond buying.
Tullett Prebon SITICO (China) Ltd and CITIC Central Tanshi said on Friday night that they would strictly adhere to regulatory guidelines on anonymity and confidentiality in listings and transactions to ensure market fairness.
Market participants have said some traders have been selecting their counterparties in long-term bond trading by adding a special tag such as “no state-owned banks” during the quoting process, in an attempt to avoid revealing what they are buying or selling to state-owned banks.
This comes as Chinese authorities have stepped up scrutiny of bond transactions by brokers and banks and intensified warnings about the risk of reckless bond buying in recent weeks, moves that appear to have halted a long and frenetic bond rally.
But the Financial News, backed by the People’s Bank of China, on Saturday hit back at claims that the central bank was intervening in the market through administrative measures.
“As long as institutions operate according to market principles and the rule of law, regulators will not intervene directly,” the paper quoted one industry source as saying.
The labeling practice is hurting liquidity in the bond market, with trading volumes in long-dated sovereign bonds falling sharply since mid-August, traders said.
China’s long-term sovereign bond surge this year was driven by investors seeking safety from a slowing economy and volatile stock markets.
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