Caifl News, October 22nd (Reporter: Wang Hong) Yesterday, the central bank released the announcement of the initial Securities, Fund, Insurance Interchange Facility (SFI) operation with an initial amount of 50 billion yuan. Informed sources today told Caifl News reporters that it is expected that the central bank will continue to carry out operations based on market trends, institutional demand, etc., and reasonably determine the amount of each operation; after the cumulative operation amount reaches the limit of 500 billion yuan, the operation scale will be further expanded as appropriate.

Specifically, on October 21st, the central bank announced that in order to better leverage the stabilizing role of securities and fund institutions, the central bank conducted the initial Securities, Fund, Insurance Company Interchange Facility operation. The initial operation amount was 50 billion yuan, conducted through a tender with rates approach, with 20 institutions participating in the bidding. The highest bid rate was 50 basis points, the lowest bid rate was 10 basis points, and the winning bid rate was 20 basis points.

"The initial operation scale of 500 billion yuan for the Securities, Fund, Insurance Company Interchange Facility is a concept of quota, and the central bank will carry out operations in subsequent stages based on the demand of participating institutions. For example, in the first operation results announcement released on October 21st on the central bank's official website, the operation amount was 50 billion yuan," said the aforementioned sources.

According to Caifl News reporters, to ensure the smooth implementation of the initial operation, on October 18th, the central bank registered the first Interchange Facility central bank bill at the Shanghai Clearing House and listed it for circulation. China International Capital Corporation has successfully used the aforementioned central bank bill to conduct the first financing.

Industry experts state that the Interchange Facility central bank bill can trade in the interbank market, making full use of the existing financial infrastructure interconnected mechanism, supporting institutions in conducting relevant business across markets.

On October 18th, the central bank and the China Securities Regulatory Commission jointly issued a notice to clarify the business process, operational elements, rights and obligations of the parties involved in the Interchange Facility operations.

The central bank entrusts specific primary dealers in the open market (Bond Trust Credit Enhancement Corporation) to conduct interchange transactions with securities, fund, and insurance companies that meet the conditions of industry regulators. The interchange period is 1 year, extendable as appropriate. The interchange rate is determined by bidding from participating institutions. Eligible collateral includes bonds, stock ETFs, ​CSI 300 index components, and public offering REITs, with discount rates set according to the risk characteristics of the collateral. Funds obtained through this tool can only be invested in capital markets for stocks, stock ETF investments, and market-making.

According to a reporter from Caixin, the central bank also exchanged government bonds based on institutions' needs in the initial operation, and the relevant operations are still ongoing. It is reported that the central bank had previously coordinated with relevant departments to promote the inter-market transfer custody of the government bonds held by the central bank, ensuring the smooth progress of subsequent operations.

Editor/Lambor