China Central Depository to Cut Fees on Key Bond Services
China Central Depository & Clearing Co., Ltd. (CCDC) has announced a public consultation to reduce fees on several of its core business services. This initiative aligns with national policies aimed at tax and fee reductions, and seeks to enhance the quality and efficiency of financial infrastructure services.
Key proposed changes include the complete waiver of issuance and registration service fees for international bonds, also known as Panda Bonds. Additionally, a 5% discount will be applied to the interest payment and redemption service fees for existing bonds in the interbank bond market, bringing the rate down to 0.00475%. Fees for these services on Sci-Tech Innovation Bonds and Panda Bonds will be entirely eliminated. A 10% discount will be offered on spot transaction settlement service fees for bond types and entities not covered by existing preferential measures in the interbank bond market, with the post-discount rate set at 135 yuan per transaction.
Further reductions include a 5% discount on settlement service fees for pledged repo, outright repo, and bond lending transactions in the interbank bond market. The discounted rates will be 114 yuan per single bond issue for pledged repos and 190 yuan for multi-bond issues, outright repos, and bond lending (including cross-custodian and centralized bond lending). For bond counter services, a 5% discount will be applied to settlement fees across all transaction types, resulting in a rate of 0.019% of the bond settlement face value, with a cap of 120 yuan per transaction for spot transactions, pledged repos, outright repos, bond lending, and bond forwards.
The CCDC's proposed fee reductions signal a strategic move to stimulate activity within China's bond market, potentially lowering capital costs for issuers and encouraging greater participation. By targeting specific services like international bond issuance and various transaction types, the CCDC aims to enhance market liquidity and operational efficiency. This policy shift reflects a broader trend of government-led financial sector support, designed to bolster economic growth and competitiveness. The fee adjustments may incentivize increased issuance and trading, thereby deepening the market's structure and potentially attracting more foreign investment into Chinese debt instruments. Over the next decade, such measures could contribute to the internationalization of the RMB and further integrate China's financial markets into the global system, though the long-term impact on CCDC's revenue and operational sustainability will warrant monitoring.
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