Chinese government has granted private securities fund firms access to the country’s interbank bond (IBB) market as part of its effort s to reform the bond market by diversifying the pool of eligible investors, asianinvestor.net has reported.
Earlier, private fund managers were restricted from directly taking part in the IBB market, due to which many had to use alternative platforms such as trust companies or mutual fund companies’s segregated mandate accounts.
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With the current move, private securities fund managers holding assets valued at over RMB10m ($1.6m) will be eligible to apply for the IBB licence.
The effective date of the change has not been disclosed yet.
However, according to asianinvestor.net, private managers’ limited knowledge of fixed income and the difficulties in holding investors craving for high returns could pose challenges in its entry into the market.
In May 2015, China gave the green light to the entry of more foreign investors in the IBB market.
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By GlobalData
