A Bond Connect scheme which promotes mutual bond market access between the Chinese mainland and Hong Kong is scheduled to start its initial trial operation for northbound trading on Monday, mainland and Hong Kong regulators announced on Sunday.
"For northbound trading, the relevant regulations, policies and operational and supervisory arrangements have been finalized, technical systems are ready, and market promotion as well as on-boarding are both underway," the People's Bank of China (PBOC), the central bank, and the Hong Kong Monetary Authority (HKMA) said in a joint statement.
The scheme could open China's multi-trillion dollar bond market to international investors, with Hong Kong being a staging point. The bond market could draw as much as 100 billion yuan (.75 billion), The South China Morning Post (SCMP) reported on Friday, citing analysts.
Foreign investors hold less than 2 percent in China's .3 trillion market, significantly lower than the between 20 percent and 30 percent international investors hold in emerging markets, noted the SCMP.
In addition to market access, the Bond Connect scheme also includes cooperation between the mainland and Hong Kong regulators in information sharing, supervision and fighting cross-boundary illegal activities, the PBOC and the HKMA said in the joint statement.
Relevant financial infrastructure institutions of the mainland and Hong Kong will carry out the scheme.