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T-bond futures open for banks, insurers

2020-3-20 11:55

Chinese 100 yuan banknotes are seen in a counting machine at a bank in Beijing, China, March 30, 2016. [Photo/Agencies]

 

Commercial banks and insurers have got the green light from the regulators recently to trade Treasury bond futures, enabling them to better hedge interest rate risks amid the novel coronavirus epidemic, which has caused sharp volatility in global financial markets.

 

A Treasury bond is a government debt security that earns interest until maturity, at which point the owner is also paid a par amount equal to the principal.

 

Banks and insurance companies are normally the big buyers of Treasury bonds, holding more than 60 percent of China's Treasury bonds. Until now, they did not have access to the bond futures market to hedge risks for their exposure in the interest rates market as bond yields have been trending down globally, putting more pressure on their asset returns.

 

The move by the regulators will give them more tools to manage their bond holdings amid the low interest rate environment and will help promote a healthy development of the country's bond derivative market, according to a recent joint statement by the central bank, the Ministry of Finance and the securities, banking and insurance regulators.

 

The five major State-owned banks will be among the first batch of financial institutions to gain permission to participate in Treasury bond futures trading. As of January, Chinese commercial banks held Treasury bonds worth about 10 trillion yuan ($1.42 trillion) while insurance companies own about 360 billion yuan of central government notes.

 

It is estimated by industry experts that banks' and insurers' participation will bring an additional 40 billion yuan into the Treasury bond futures market.

 

Analysts said that trading Treasury bond futures will allow banks and insurers to effectively manage interest rate risks as their operations have seen rising challenges amid the low interest rate environment. They added that bond futures will provide an important trading strategy for banks and insurers and help maintain the overall stability of the country's financial system.

 

Globally, the total outstanding value of bonds with negative interest rates reached about $17 trillion as of September, according to a report by the Bank for International Settlements. China's interest rates have also trended down as the central bank has been cutting rates to shore up growth amid the epidemic.

 

"In a low interest rate environment, the yields of fixed-income assets will decline and some insurers could face the situation where their asset returns fail to cover the costs. If financial institutions can only adjust their portfolios in the spot markets, it will cause sharp volatility in the markets," Liu Xuan, head of the CFFEX Institute for Financial Derivatives in Beijing, said in a research note.

 

Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, said that allowing banks and insurers to trade Treasury bond futures marks an important development in China's financial derivatives market.

 

"It will boost the liquidity of the Treasury bond futures market and help improve the yield curve which will better reflect the real market prices," Dong said.

 

"It will also enrich risk management tools for banks and insurers. The institutions have been using short-term interest rate swaps to hedge risks, but there has been a lack of long-term risk management tools," he said.

 

Chen Li, head of research at Chuancai Securities, said that banks' and insurers' participation in the Treasury bond futures market is an example of China's capital market becoming more mature and more in line with international practices as Treasury bond futures have been a standard and important tool in developed markets.

 

2016年3月30日,在中国北京的一家银行里,100元人民币被放在一台点钞机里。【图片/机构】


最近,监管机构批准商业银行和保险公司进行美国国债期货交易,使它们能够更好地对冲在新型冠状病毒(coronavirus)疫情中面临的利率风险。冠状病毒疫情已导致全球金融市场大幅波动。


国库券是一种政府债券,在到期前可以获得利息,在到期时,持有者还可以获得与本金相等的票面金额。


银行和保险公司通常是美国国债的大买家,持有超过60%的中国国债。到目前为止,由于债券收益率在全球呈下降趋势,给他们的资产回报带来了更大的压力,他们还没有进入债券期货市场,以对冲他们在利率市场的风险敞口。


这家监管机构会给他们更多的工具来管理他们的国债在低利率环境下,将有助于促进一个国家的债券衍生品市场的健康发展,根据最近的一项联合声明由中央银行、财政部证券,银行和保险监管机构。


五大国有银行将成为首批获准参与美国国债期货交易的金融机构之一。截至1月份,中国商业银行持有约10万亿元人民币(合1.42万亿美元)的美国国债,而保险公司持有约3600亿元人民币的中央政府票据。


据业内专家估计,银行和保险公司的参与将为美国国债期货市场带来400亿元的额外收入。


分析师表示,在低利率环境下,银行和保险公司的业务面临越来越多的挑战,因此,交易美国国债期货将使银行和保险公司能够有效地管理利率风险。他们补充称,债券期货将为银行和保险公司提供一个重要的交易策略,并有助于保持中国金融体系的整体稳定。


根据国际清算银行(Bank for International Settlements)的一份报告,截至9月份,全球负利率债券的未偿总额达到约17万亿美元。中国的利率也出现了下降趋势,因为中国央行一直在降息以支撑经济增长。


“在低利率环境下,固定收益资产的收益率将下降,一些保险公司可能会面临资产回报率无法覆盖成本的局面。”如果金融机构只能在现货市场调整其投资组合,将导致市场剧烈波动,”北京CFFEX金融衍生品研究所所长刘璇在一份研究报告中表示。


武汉科技大学金融与证券研究所所长董登新表示,允许银行和保险公司交易美国国债期货,标志着中国金融衍生品市场的重要发展。


他说:“这将增强国债期货市场的流动性,有助于改善收益率曲线,从而更好地反映真实的市场价格。”


它还将丰富银行和保险公司的风险管理工具。这些机构一直在利用短期利率互换来对冲风险,但一直缺乏长期风险管理工具,”他表示。


陈莉,Chuancai证券研究主管表示,银行和保险公司参与美国国债期货市场就是一个例子,中国资本市场变得更成熟、更符合国际惯例作为国债期货是一个标准和发达市场的重要工具。

 

原作者: Li Xiang 来自: china daily