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I. Description
The RMB bond lending business means the business where bond holding institutions lend their own RMB bonds to institutions needing bonds as permitted by the policy and collect certain charges for lending in accordance with their operational needs, and recover the bonds after expiration. The lending costs are determined based on the market price-based negotiation between the two parties. The interest receivable of the bonds shall be owned by the bond-lending party.
The underlying bonds of RMB bond lending business are RMB bonds that are freely tradable on the major domestic bond markets (including the national inter-bank bond market and stock exchanges).
For the lending party, the bond lending helps to make use of the existing RMB bonds assets of banks, increase the value of bond investment business income and optimize the investment income structure; for the borrowing party, the bond lending helps meet business needs in special cases.
II. Target Customers
Members of the treasury bond syndicate of the Ministry of Finance, tier-1 trader in the open market of the People’s Bank of China, members of the policy bank syndicate, and financial institutions that have good cooperation with ICBC.
III. Functional Features
1. Both the borrower and lender are financial institutions and have qualifications for trading in the interbank market.
2. Bond lending is a two-way trading in which market participants can either borrow or lend bonds.
3. The lending rate is negotiated on a case-by-case basis based on the actual situation of lending.
4. The bond lending period is flexible and can be freely determined by both parties within a period of up to 365 days.
5. If the borrowing bonds have interest during the period of borrowing, the interest will be owned by the lending party.
6. After the maturity of bonds borrowed/lent, the borrowing party must, in principle, return the bonds.
IV. Features and Advantages
1. ICBC owns the largest size of bond assets among domestic institutions, and various types of bonds, which can fully meet customer’s diversified needs of bonds.
2. ICBC, as an important participant in the domestic bond market, has traded actively, established a professional and excellent team of traders, and accumulated rich experience in bond business development. It is a leader in the domestic RMB bond market.
V. Price
ICBC conducts transaction-specific negotiation with customers to determine its price.
VI. Service Channels and Hours
Bond lending transactions can be conducted through the trading system of the National Interbank Funding Center, or through other means recognized by the stock exchange.
Trading time: the time specified by the National Interbank Funding Center (9:00 to 12:00, 13:30 to 16:50 (Beijing Time), except statutory holidays) or the trading hours specified by the stock exchange and the working hours specified by ICBC.
VII. Application Process
1. The customer expresses to ICBC the intention to initiate RMB bond lending trading and submits an application.
2. After the review and approval by the ICBC, the two parties sign the Master Agreement on the RMB Bond Lending Transactions of the Industrial and Commercial Bank of China.
3. Bond lending transactions can be conducted through the RMB trading system of the National Interbank Funding Center, or through other means recognized by the stock exchange.
VIII. Definitions
1. Inter-bank bond market: It is the largest bond trading market in China and belongs to the OTC market. The types of bonds being circulated in the market include treasury bond, central bank bills, policy financial bonds, financial bonds, subordinated bonds, ultra-short-term financing bills, short-term financing bills, medium-term notes, and corporate bonds.
2. Exchange market: It refers to the stock exchange market. The types of bonds being circulated in this market mainly include treasury bond, corporate bonds and enterprise bonds. The market mainly includes the Shanghai Stock Exchange and the Shenzhen Stock Exchange.
Note: The information given on this page is for reference only. See the announcements and rules of local outlets for details.
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