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China’s Securities Regulator Focuses on Bond Trading Compliance
SHANGHAI (Reuters) – In an effort to control the excessive purchasing activity of Chinese government bonds, China’s securities regulator has mandated several domestic brokerages to conduct thorough inspections of their bond trading practices. This directive aims to ensure adherence to compliance regulations amid growing concerns over potential market instability.
Sources familiar with the situation, who requested anonymity as they were not authorized to speak with the media, revealed that the brokerages have been instructed to review all aspects of their bond trading operations. The China Securities Regulatory Commission (CSRC) has yet to provide a formal comment regarding these developments.
China’s economic landscape has been shaky, heavily impacted by a substantial property market crisis that has persisted for an extended period. This uncertainty has prompted a diverse range of investors—including major banks, insurance companies, mutual funds, and rural financial institutions—to seek refuge in the bond market. The ongoing decline in deposit rates by banks, coupled with fluctuations in the stock market, has intensified this trend.
The country’s central bank has issued repeated warnings against impulsive bond purchases, expressing concerns over the emergence of a potential bubble that echoes the crisis experienced by Silicon Valley Bank. Such actions reflect a broader apprehension regarding the sustainability of the current bond investment surge and the risks it poses to the overall financial system.
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