Traders in China’s $21-T bond market turn to WeChat after price feeds halted

This Monday, January 30, 2023, photo shows the 128-story Shanghai Tower, in Lujiazui, Pudong, Shanghai. Citing security concerns, Chinese regulators ordered money brokers to suspend their data feeds; they turned to social media platforms.

CHINA’S bond trading was disrupted last Wednesday morning after the regulator reportedly told money brokers to suspend their data feeds due to security concerns.

Some information platforms that provide real-time bond quotes from money brokers were showing blank screens, said traders, who asked not to be identified because they’re not authorized to speak publicly. Traders have resorted to social media platforms such as Tencent’s QQ and WeChat to share quotes, they said.

Brokers including the joint ventures of Tullett Prebon and NEX International Ltd. were instructed to stop providing data to third parties in coming days due to data security concerns, Reuters reported late Tuesday, citing people familiar with the matter. Brokers previously fed price quotes to data vendors such as Ningbo Sumscope Information Technology Co. and Wind Information Co., Reuters said.

The result of the reported ban will be falling trading volumes and a rise in conflict of interest due to inconsistent information, said Li Kai, founding partner of Beijing Shengao Fund Management Co.

“Without these data platforms to provide bond quotes, market liquidity will definitely decrease,” Li said. “There are already issues arising in trading today. Some can’t sell their bonds while others have difficulty buying the bonds they want. There is no good alternatives apart from adding WeChat and QQ chat groups at the moment.”

Market history

CHINA’S 145-trillion yuan ($21 trillion) bond market is predominantly an over-the counter market where identifying counterparties and accessing market quotes have been a long headache for traders. About a decade ago, various privately-owned data vendors such as Qeubee and Dealing Matrix emerged to consolidate real-time bond quotes from money brokers.

Five of China’s six money brokers, which also include joint ventures of BGC Partners and Compagnie Financiere Tradition SA, received the notice from the regulator to halt their feeds, Reuters said. Conducting data feed operations was outside the remit of brokers’ licensed business, the news agency reported.

None of the money brokers responded to requests for comment.

An official who declined to be named at Wind told Bloomberg News that starting from Wednesday, bond quotations from China’s money brokers will no longer be available on Wind’s terminal. Instead the firm will only provide trading data from China Foreign Exchange Trade System and the stock exchanges, the official said.

No quotes

AN official at another platform, Dealing Matrix, said the company wasn’t able to receive quotes from brokers on Wednesday. There have been many rumors about the data, but they haven’t been verified and there are no official documents, said the official, who didn’t want to be named.

The regulator of the nation’s money brokers, China Banking and Insurance Regulatory Commission, didn’t immediately respond to a request for comment, nor did Sumscope, which operates the popular Qeubee data platform.

Bloomberg LP, the parent company of Bloomberg News, also offers fixed-income trading, data and information to the financial services industry. The reported move comes just after China announced plans to set up an enlarged national regulator that will absorb the banking and insurance watchdog and oversee all financial sectors except the securities industry.

Time needed

QU Qing, head of Huachuang Securities Co.’s investment advisory unit, said traders will ultimately adjust to the change.

“It will certainly take some time for traders to get accustomed to the new norm,” Qu said. “But looking from a long-term perspective, trading demand won’t be affected by the change of trading methodology—it will continue to be decided by macro environment, micro factors such as trading strategies. As the old platform is phased out, there will be replacements.” Bloomberg News

Image credits: Bloomberg



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