Anonymity in Bond Quotation Process

SHANGHAI (Reuters) – Two Chinese money brokers will ensure anonymity in the bond quotation process. Traders have been avoiding state banks as counterparts amid fears of regulatory scrutiny over reckless bond-buying.

Tullett Prebon SITICO (China) Ltd and CITIC Central Tanshi announced their commitment to adhere to regulatory guidelines for anonymity and confidentiality in trading, ensuring market fairness.

Some traders select long-term bond trading counterparts by adding tags like “no state banks” during the quotation process to avoid revealing their transactions to state banks.

This development follows increased scrutiny by Chinese authorities over brokers and banks’ bond dealings and warnings regarding the risks of reckless bond-buying, which have dampened a long bond rally.

In response, the Financial News, which is backed by the People’s Bank of China, has denied that the central bank is intervening in the market through administrative measures. An industry source stated, “As long as institutions trade in accordance with market principles and rule of law, the regulators will not directly intervene.”

However, this tagging practice has negatively impacted liquidity in the bond market, leading to a significant drop in the trading volume of long-dated sovereign bonds since mid-August. The surge in China’s long-dated sovereign bonds this year reflects investors’ search for safety due to a slowing economy and volatile stock markets.