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  Home Page > Corporate Banking >Financial market >Products & Services >Investment products >Agency Bond Trade and Settlement
Agency Bond Trade and Settlement
 

I. Description
The agency bond trade and settlement business refers to the product that the ICBC carries out bond trade in the domestic inter-bank bond market and handles related bond settlement on behalf of customers.
The agency bond trade and settlement business offered by the ICBC mainly includes:
1. Handle the registration formalities at designated branches of the People’s Bank of China for the customers, handle the formalities relating to opening and cancellation of bond accounts at the inter-bank market bond depository and clearing institutions such as China Government Securities Depository Trust & Clearing Co. Ltd. (“CGSDTC”) and the Shanghai Clearing House (“SCH”) in the customers’ name; and open accounts in the local currency trade system of the China Forex Trade Center & National Inter-bank Offering Center (the “Trade Center”) for the customers.
2. Respond to price enquiry of the customers, and reach bond transactions with trading counterparties in the local currency trade system on behalf of customers and based on the customers’ entrustment.
3. Handle the formalities relating to bond transfers pursuant to customers’ entrustment.
4. Provide bond account reconciliation and enquiry services for the customers.
5. Objectively and timely provide market information to the customers.

II. Target Customers
Domestic and overseas institutions that have the needs of investing in and trading bonds in the domestic inter-bank market, are willing to handle bond settlement through the ICBC, and are approved to carry out bond transactions in the domestic inter-bank bond market by regulatory institutions. Of them, overseas institutions include the overseas RMB clearing banks, overseas participant banks of cross-border trade RMB settlement, other overseas financial institutions that participate in the cross-border service & trade pilot program, RMB qualified foreign institutional investors (RQFII), qualified foreign institutional investors (QFII) and other overseas investors that are approved by the People’s Bank of China.

III. Features and Advantages
i. Main Characteristics of the Agency Bond Trade and Settlement Business
1. It provides a business channel for the customers to directly enter into the domestic inter-bank bond market.
2. It meets the customers’ diverse asset allocation needs and the information disclosure requirements of listed companies.
3. It offers efficient settlement service and agency trade services, and ensures the customers’ absolute dominance over the bond assets under their names.
4. It offers personalized advisory services such as market information and investment advices.
ii. Position of the ICBC in the Inter-Bank Bond Market
1. Rich market experience
Since the inter-bank market was set up in June 1997, the ICBC has been handling business in the inter-bank market as one of the first participants. Upon nearly two decades of development, it has accumulated abundant market experiences.
2. Complete business qualifications
The ICBC is one of the first market participants that obtained the qualifications for market-maker in the inter-bank bond market, primary dealer of open market operations, class-A member of the treasury bond syndicate, class-A member of the policy financial bonds syndicate, and the bond settlement agent etc. It is one of the commercial banks that have the most complete set of RMB business qualifications in China’s inter-bank market.
3. Prominent market positions
The ICBC is the largest investor, market-maker, as well as the largest underwriter bank in the inter-bank bond market. Its bond underwriting business has topped the market for years. Leveraging the abundant trade resources and investment expertise, it offers strong market quotation services to the customers.
4. Mighty market influence
The ICBC has won the following awards for years in a row: Best Agent of Overseas Institutions (CFETS), Most Market Influence (CFETS), Most Active Bond Trader in the Inter-Bank Bond Market (CFETS), Best Derivative Trade (CFETS), Annual Excellent Settlement Member of Bond Proprietary Business (CCDC), Annual Excellent Settlement Member of Bond Agent Business (CCDC) and Best Market-Maker in the Inter-Bank Bond Market (NAFMII).
5. Outstanding achievements in agency trade and settlement business
The ICBC is one of the first commercial banks that launched the agency bond trade and settlement business. Since the People’s Bank of China started to announce information about the bond settlement agent business in 2006, the ICBC has been topping the list by the scale of bonds it entrusted, and its market share once reached as high as 28.61%. The ICBC was awarded the title of “Annual Excellent Settlement Member of Bond Agent Business” by the CGSDTC for years in a row, and in 2014, it was named the “Best Agent of Overseas Institutions” by the Trade Center.
iii. Advantages of ICBC’s agency bond trade and settlement business
1. It offers competitive bond quotation and trade services for the customers by taking advantage of its huge RMB fund, intensive fund operation system, extensive trading partners and experienced investment & trade team.
2. It offers efficient and convenient agency bond trade and settlement services to the customers through a professional agency bond trade and settlement team and advanced business management systems.
3. The excellent research team timely provides comprehensive market information, differentiated investment advice and dynamic portfolio management strategies to the customers.

IV. Requirements 
Domestic customers that apply for the agency bond trade and settlement business must meet the access criteria set by regulatory authorities; overseas central banks or monetary authorities, overseas RMB clearing banks and overseas participant banks of cross-border trade RMB settlement must get approval of the People’s Bank of China on allowing it to carry out bond trade in the inter-bank bond market; QFIIs and RQFIIs must get the qualification of qualified investors issued by the China Securities Regulatory Commission, the investment quota ratified by the State Administration of Foreign Exchange, as well as the approval of the People’s Bank of China on allowing it to carry out bond trade in the inter-bank bond market.

V. Service Channels and Hours
The customers may apply to the ICBC branches that handle this business or the Head Office to carry out the agency bond trade and settlement business during the working hours of related ICBC branches or the Head Office.

VI. Operation Guide
i. Application
1. Domestic customers that apply to open the agency bond trade and settlement business must meet the access criteria set by regulatory departments; and overseas customers that apply to open the agency bond trade and settlement business must get approval of the People’s Bank of China on entering the inter-bank bond market, submit the applications materials to the ICBC based on the requirements of the People’s Bank of China, and sign the Agency Bond Trade and Settlement Agreement with the ICBC. The ICBC shall assist the customers to submit the materials to the People’s Bank of China for the application of investing and trading in the inter-bank bond market.
2. In order to handle the agency bond trade and settlement business, the customers shall appoint a fund account for the bond trade and settlement. Of it, overseas institutional customers shall open a special RMB account at branches of the ICBC and designate it as the fund account for the bond trade and settlement.
3. The customers shall submit the application and registration materials relating to opening of the bond account and the account in the local currency trade system to the ICBC in accordance with requirements of the regulatory departments, the bond depository & clearing institution, the Trade Center and the ICBC. The ICBC handles the registration formalities with the Shanghai Headquarters of the People’s Bank of China on behalf of the customers, and completes the formalities relating to opening of the bond account and the account in the local currency trade system at the CGSDTC, SCH and the Trade Center.
ii. Agency Bond Trade
1. The customers may bring forth price enquiry demand to the ICBC through channels such as facsimile, e-mail or corporate online banking system of the ICBC when it has the bond trade demand. The ICBC will respond to the customers after it enquires prices in the inter-bank market based on the customers’ demand.
2. After confirming the intent of trade, the customers may send power of attorney for the bond trade to the ICBC by means that are confirmed by both parties, such as facsimile, email or corporate online banking system of the ICBC. The ICBC accepts and completes the bond trade in the local currency trade system of the Trade Center with the trading partners on behalf of the customers.
3. After a bond deal is reached, the ICBC provides the details of transactions generated by the local currency trade system to the customers through the corporate online banking system of the ICBC, email or other methods specified by both parties at request of the customers.
iii. Agency Bond Settlement
1. Pursuant to the agreement with the customers, the ICBC may directly handle bond settlement for the customers after a bond deal is reached, or handle the bond settlement for the customers based on the agency bond trade instruction issued by the customers.
2. After the bond settlement is completed, the ICBC provides details of bond delivery generated from the comprehensive business platform of China Bond or the client terminal of SCH to the customers through the corporate online banking system of the ICBC, emails or other methods specified by both parties at request of the customers.

VII. Typical Case
In September 2013, an overseas participant bank of cross-border trade RMB settlement selected the ICBC as its settlement agent, and applied to the People’s Bank of China for entering the domestic inter-bank bond market, wishing to boost its fund operation returns through bond investment. In July 2014, the ICBC assisted the overseas institution in successfully obtaining the qualification of entering the domestic inter-bank bond market and relevant investment quota, and provided professional market analysis and investment advices to it based on demand of the customer. Following investment advice of the ICBC, the customer bought RMB 60 million (face value) worth of a certain three-year mid-term note from the inter-bank bond market with a 4.84% yield rate, and the yield rate was 59 bps higher than the deposit interest rate of the same tenure, thus lifting its investment returns. The ICBC reached the bond deal on behalf of the customer as a settlement agent, and handled the related bond settlement formalities, offering comprehensive investment & trade services to the customer.

VIII. Risk Prompt
Bond prices may undergo adverse fluctuations due to the impact of domestic and overseas political and economic factors or unexpected incidents. The bond trade handled by customers may result in losses. Customers shall closely watch over changes in the market prices and prudently participate in bond trade.
In addition to market risk, the customers shall also watch out for other possible policy risk, liquidity risk, operational risk, risk of force majeure or unexpected incident, and other contingent risk during bond transactions. Please carefully read through relevant reminders in the product brochure and business agreements.

Note: The contents on this page are for reference only. The ultimate power of interpretation is under the Industrial and Commercial Bank of China Limited. For part of the contents, notice and specific regulations of local branches shall prevail.


(2015-04-24)
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