Bond payments are due at the time of delivery.
Trades under the Bond Connect will now be settled on a Delivery versus Payment (DvP) basis, according to a government statement, which means that payment for bonds will be due at the time of delivery.
“This increases settlement efficiency and reduces settlement risks, affording greater convenience to international investors investing through Bond Connect,” according to a government statement.
There has been strong demand for the DvP settlement since the Bond Connect scheme was first launched in July 2017 as the lack has been seen as a major obstacle for offshore investors, according to Reuters.
The reform, which was also amongst several necessary criteria for China bonds to be added to the Bloomberg Barclays Global Aggregate Index in April 2019, is expected to boost trading volume on the bond link.
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