On October 18, the People’s Bank of China (PBOC) announced the establishment of the Securities, Fund, and Insurance Company Swap Facility (SFISF), as reported on its official website. To ensure the smooth operation of this tool, the PBOC, in collaboration with the China Securities Regulatory Commission (CSRC), has issued a notice outlining the business processes, operational elements, and the rights and obligations of both parties involved in the swap transactions.
The PBOC has designated specific primary dealers of open market operations, particularly the China Bond Insurance Company, to conduct swap transactions with qualifying securities, fund, and insurance companies as determined by industry regulators. The swap agreements will have a one-year term, with options for extension based on circumstances. The swap rates will be determined through a bidding process among the participating institutions. Acceptable collateral will include bonds, equity exchange-traded funds (ETFs), stocks from the CSI 300 index, and publicly offered real estate investment trusts (REITs), with discount rates adjusted according to the risk characteristics of the collateral.
Currently, 20 securities and fund companies have been approved to participate in the swap facility, and the first batch of applications has already exceeded 200 billion yuan. Starting immediately, the PBOC will officially initiate operations according to the needs of the participating institutions, providing support for the stable development of the capital markets.
