The People’s Bank of China gave MUFG Bank’s wholly-owned China subsidiary a Bond Settlement Agent License in the country’s interbank bond market, amid uncertainties surrounding the market’s outlook due to the coronavirus pandemic and escalating U.S. and China trade tensions.
With the license, the bank can trade, settle and provide custody for interbank bond market products on behalf of foreign investors. MUFG Bank’s approval comes as China has been expanding its interbank bond market access to foreign investors in recent years. China’s interbank bond market is the second largest in the world after the U.S., the bank said.
With an MUFG Bank account, Japanese investors can transact Chinese government bonds and bank debentures directly with Chinese investors in Japanese. Previously, Japanese investors had to go through an overseas bank to carry out complex prior registration protocol and provide buy and sell instructions in Chinese, Nikkei Asian Review reported.
“With this latest license, MUFG Bank and MUFG Bank (China) will further contribute to the development of the China bond market and strive to provide the best-quality financial services to our valued investors,” the bank said.
In July 2017, MUFG became the first Japanese bank to obtain a license as a Bond Connect market maker. Bond Connect is a cross-border bond trading and settlement scheme that has been the primary way for Japanese investors to carry out bond trades in China. MUFG was also awarded a Chinese bond underwriting license in October 2019, allowing it to support issuance activities of nonfinancial institutions in China’s interbank bond market.