The Central Bank of Ireland (CBI) has given the green-light for Irish Undertakings for Collective Investments in Transferable Securities (UCITS) and Alternative Investment Funds (AIFs) to invest in the Chinese inter bank bond market via Bond Connect.
WHAT IS BOND CONNECT
The China Bond Connect (“Bond Connect”) Initiative launched in 2017 and was intended to navigate around the QFII and RQFII quotas to promote a more direct investment into the China Bond Market.
Bond Connect is a new mutual market access scheme that allows investors from Mainland China and overseas to trade in each other’s bond markets through connection between the related Mainland and Hong Kong financial infrastructure institutions.
Northbound Trading commenced on 3 July 2017, allowing overseas investors from Hong Kong and other regions to invest in the China inter bank bond market (CIBM) through mutual access arrangements in respect of trading, custody and settlement. Southbound Trading will be explored at a later stage.
WHAT DOES THIS MEAN FOR THE IRISH FUNDS INDUSTRY WANTING TO ACCESS THE CHINESE BOND MARKET?
The CBI, after completing its review has approved the initiative, whereby Irish regulated funds (UCITS and AIFs) will be able to access the bond market in China by way of Bond Connect.
The CBI has now approved the investment by Irish funds and has confirmed that it is satisfied by the depository requirements set out under UCITS and AIFMD. This is a milestone development for the Irish funds industry and will result in many new product launches.
Irish depositaries have already conducted a detailed analysis and are satisfied that they are in a position to comply with their safekeeping obligations in respect of Irish collective investment schemes accessing Bond Connect.
HOW CAN DMS HELP?
DMS is delighted at the news released by the CBI and looks forward to working with its clients to assist them in trading via the Bond Connect. Please let Seamus Fox, responsible for leading the Irish Desk for APAC clients or any of your usual DMS representatives know how we can assist you further.
Niaz Khan
Seamus Fox
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