Chinese Money Brokers Ensure Anonymity in Bond Quotation, According to Reuters

SHANGHAI – Two Chinese money brokers have announced their commitment to maintaining anonymity in bond quotations following market reports that some traders have been deliberately avoiding state banks as trading partners due to concerns over increased regulatory scrutiny related to reckless bond-buying.

On Friday, Tullett Prebon SITICO (China) Ltd and CITIC Central Tanshi stated that they would strictly follow regulatory guidelines aimed at ensuring confidentiality and fairness in trading and quotation processes.

Market participants indicated that certain traders have started labeling their long-term bond trading partners with tags such as “no state banks” during the quotation process. This move aims to shield their buying or selling activities from state banks.

This development occurs amidst heightened oversight from Chinese authorities regarding brokers and banks’ bond transactions, along with intensified warnings about the risks posed by imprudent bond-buying practices. These actions seem to have put a stop to a prolonged surge in bond prices.

However, the Financial News, which is associated with the People’s Bank of China, rejected claims on Saturday that the central bank was intervening in the market through administrative measures. An industry source quoted by the newspaper stated, “As long as institutions trade in accordance with market principles and the rule of law, the regulators will not directly intervene.”

Traders have reported that the tagging practice has negatively impacted liquidity in the bond market, leading to a significant decline in trading volume of long-dated sovereign bonds since mid-August.

The remarkable performance of China’s long-dated sovereign bonds this year has been driven by investors seeking refuge amid a slowing economy and fluctuating stock markets.