Standard Chartered China has become the third international bank to gain regulatory approval as a market maker in China's national interbank bond market. Previous approvals have been issued to Citi in August 2009 and J.P. Morgan in May 2008.
Eva Chow, head of corporate communications for Standard Chartered China, explained that "Standard Chartered Bank has been a very active player in the renminbi bond market. With the bond market maker status, the bank could now quote buying and selling prices continuously in the interbank bond market". The approval will also allow Standard Chartered to compete in the domestic market for a range of interest-rate products, and to gain access to a wider and more diverse client base.
According to Dealogic data, China's domestic bond market saw 419 new issues in 2009 with a combined value of $218 billion; and this year already the renminbi market has seen six deals with a total value of $1.5 billion. In other words, it is a sizeable amount of business that Standard Chartered is gaining access to through this market maker approval.
The timing of the approval is opportune as it comes on the back of a move by the People's Bank of China (PBOC) to put in place tighter regulatory controls. On Monday, the PBOC raised the renminbi reserve bank requirement by 50 basis points to 16.0% for large financial institutions and to 14% for smaller banks in an effort to slow domestic growth.