Bond Connect:
A Game Changer
FAST TRACK TO
China Interbank Bond Market

Key Statistics✓ Access to China Interbank Bond Market✓ Use of Investors’ Existing Global & Local Custodian Structure✓ A Developed Market Model: E-trading Platforms

Approved Investors

1500 +Major Investor Base

31 Jurisdictions

Key Stakeholders

Onshore Market Makers
Global Custodians✓ Access to All CIBM Tradable Bonds, FX Derivatives

60 Local CMU Banks✓ Continued Enhancements, Derivatives & Other Products

24 FX Banks
2 Access Platforms✓ Ease of Access & Increasingly Simplified Onboarding Procedures via BCCL✓ The Go-to Access Scheme for Sophisticated Global Investors, Index Trackers✓ Forecasts 3000 investors by 2022

Key Bond Types in China Bond Market
Private Placement (PPN),
2%
Financial Bonds,
8%Enterprise Bonds,
3%
Government
Supported Bonds, 2%
Medium-Term Notes(MTNs), 7%
Commercial Paper(CPs / SCPs), 3%
Certificate of Deposits(NCDs), 12%

Asset-BackedSecurities (ABS),
3%

ChineseGovernment
Bonds, 18%~800 issues (RMB 6.4tn+)

Average Daily Trading
VolumeRMB 19.3 bn in Oct 2019, up
from RMB 3.58bn in 2018

Trade Tickets

21,000+ YTD 2019, up from
7,482 in 2018

Foreign Holdings

Up 139% at RMB 2.02tn sincelaunchInvestment focus

55% Policy Banks, 27% CGB,
14% NCD, 4% Others

Investor Base

Asset
Management, 2%
Securities,2%Banks,

Others, 11%Local Government
Bonds,
24%

Policy Bank
Bonds, 18%

Primary Issuances

Canada, 3%

Others, 1%
Insurance,
1%

8%Japan,3%Singapore 5%
US, 36%
Luxembourg, 5%
Taiwan, 6%
UK, 9%

HK, 22%

International AssetManagement Funds,86%

Ask the Audiences…
“Bond Connect broadens the opportunity for foreign investors toaccess the China interbank bond market, leveraging offshore
infrastructure that is more familiar to the global community.
Increased communications, mutual understanding and cooperation will continue to be important factors in the integrationof China’s capital market going forward.”

Bond connect is a true gateway to China. It pioneered an end-to-end
trading channel that provides execution with ease of mind. Bond Connect
essentially plays a major role in the opening of the onshore market byprompting a faster development of complementary products andderivatives. BCCL is an effective link that connects international investors
with onshore stakeholders.

— Patrick Leung, Head of APAC Fixed Income & FX Trading,BlackRock— Alex Chow, Head, Asset Liability Management
Maybank Hong Kong

Bond Connect
Northbound Operating Model
OFFSHORE

HONG KONG

MAINLAND CHINA

Trading
Recognized
AccessPlatforms

International
Investors
Existing interface

CFETS
Trading
System

Trading Link

Existing interface

GlobalCustodians

HKMA
CMU

CMU
Members

Onshore BC
Market Makers
Existing
interface

CCDC &Shanghai
Clearing
House

Nominee Structure
Settlement Link

Settlement

Northbound Bond Connect Key Features
Trading Arrangement
Trading
Model• International investors trade
via RFQ with Bond Connect
market makers in competition

Settlement Arrangement
AccountStructure• STP process & OMS
integration via E-Trading
Platforms• Trades registered in CFETS

E-TradingPlatform• Tradeweb & Bloomberg

Instruments

CIBM Cash Bonds & FX
Derivatives

Trading
ProtocolTradeAmendment/Cancellation

Trading Size

• RFQ with one or more Bond
Connect market makers• Block trade allocation isavailable• All trades registered on CFETS
cannot be amended orcancelled• Settlement Failures: Investors
submit settlement failure
report to CFETS facilitated byBCCL
Minimum: RMB 10,000
Increment: RMB 10,000

Trading
Hours• CMU, as nominee, opens
securities accounts withonshore CSDs
• CMU members to open subaccounts with CMU for theirinvestors

CustodyStructure

Multi-tier structure

Settlement• T+0, T+1, T+2, T+3• Gross settlement, DVP

Settlement
Currency• RMB• Other Currencies: FX
conversion is done via HK
Settlement Banks• International ISDA applies

Offshore
Securities
Settlement
Agent• Full integration withinternational Global / Local
custodian approach

BeneficialOwnership

Overseas investors havebeneficial ownership ofsecurities held under the nameof the nominee holder

Cash & Tax

09:00-12:00; 13:30-16:30 CSTTrading & Settlement follow
CIBM Market Calendar

Bond Connect on the move…
✓✓✓✓✓

✓

On the Radar…
✓✓• Participating CMU members• No cash exposure onshore• HKMA CMU sweeps cash toHK promptly. No tax in HK onbalances held by GC

Contact Us
BCCL Sales & Marketing

JPMorgan to include China bonds in Benchmark
Indices with 10% capped weighting from Feb 2020
Primary Market Information Platform Launched
NCD Primary Subscription directly via BondConnect & CFETS
E-filing: Onboarding Process Digitalization
Settlement: Cutoff time for securities
instruction/fund deposit extended from 12pm to2pm; Wire transfer of RMB funds on real-timebasis, cutoff time extended from 12pm to 4pm
BCCL Series Events on China Bond Market✓✓

More Global Index Inclusion of Chinese securities,
such as FTSE WGBI series
New Products & Derivatives▪
Cross border Swaps▪
Cross border Repo▪
FX Trading via Third Party inCompetition
Platform Upgrades
More in the Pipeline

We value our partnership with BCCL. With their assistance,
they enabled us to expeditiously on-board Mutual Funds andMandated Accounts for trading on China Bond Connect. TheBCCL Team is exceptional in their knowledge about the end-toend process for trading in the China Markets. Our experienceis that the BCCL team provides distinguished and outstanding
services – they are very professional, readily available, andextremely responsive, which has allowed TCW to successfullycomplete the documentation and trading processes.

Unit 4701, 47/F., Two Exchange Square, 8 Connaught Place, Central. Hong Kong
Tel: (+852) 2327 0033
Email: info@chinabondconnect.com

Bond Connect is a milestone to make a convenient
way for foreign investors investing into theimportant onshore RMB bond market.
— Ben Yuen, Chief Investment Officer, Fixed Income
BOCHK Asset Management

Admission Handbook— Bibi Khan, Managing DirectorTCW