China has laid out a blueprint for its top securities regulator to take over the part of the country’s corporate bond market currently overseen by the economic planning agency, as it strives to unify regulation of its $21 trillion bond market.
The National Development and Reform Commission (NDRC) will transfer oversight of enterprise bonds (企业债), a type of corporate bond, to the China Securities Regulatory Commission (CSRC) over a period of six months, according to a plan released by both departments on Friday.
The move is part of a broader overhaul of China’s financial regulatory system announced last month that includes creating a single regulatory body to govern all parts of the financial industry other than securities. It also marks a step forward in unifying the fragmented oversight of the country’s bond market, which is supervised by three different bodies — the NDRC, the CSRC and the People’s Bank of China.
The securities regulator announced Monday that it has approved the registration of 34 enterprise bonds with a total fundraising target of 54.2 billion yuan ($7.9 billion). The proceeds are scheduled to be used in sectors including transportation, industrial parks and development of rural industries.
China’s financial regulators have for years been trying to set up unified rules for the country’s bond market, which straddles two domains — the interbank market and the exchange market — and is overseen by different regulators. They have established a unified bond market law enforcement mechanism, and approved a connect mechanism to enable investors from one market to trade on the other.
The outstanding balance of enterprise bonds declined from 3.3 trillion yuan at the end of 2016 to 2.1 trillion yuan as of December. The transfer of oversight of the securities is expected to have limited impact on the market, bond analysts said.
Contact reporter Zhang Yukun (yukunzhang@caixin.com) and editor Jonathan Breen (jonathanbreen@caixin.com)
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