CBRC to end listed bonds ban

The China Banking Regulatory Commission is set to allow banks to invest in bonds listed on the domestic stock market after a 12-year ban, the Wall Street Journal reported, citing a person familiar with the matter. The decision will provide a major boost to what is currently a semi-dormant sector of the fixed-income market. Analysts expect that allowing cash-rich banks to buy exchange-traded bonds will improve liquidity in the market, lower companies' financing costs, and help Chinese companies reduce their reliance on bank loans. So far, the regulator has approved the Bank of Communications (BOC), the Industrial & Commercial Bank of China (ICBC), and China Construction Bank (CCB) to trade government and corporate bonds listed on both the Shanghai and Shenzhen stock exchanges. BOC and CCB have also already received approval from the exchanges, but ICBC has yet to apply for the necessary trading qualification. Banks have been banned from trading bonds on the exchanges since 1997 when Beijing said it uncovered irregularities in the market.