Tradeweb and CFETS launch southbound Bond Connect channel

Dan Barnes

Market operator Tradeweb Markets is expanding its trading link with China Foreign Exchange Trade System (CFETS) under the Bond Connect channel on 24 September 2021 to allow mainland China onshore institutions to invest in Hong Kong’s fixed income markets.

Tradeweb first allowed offshore investors to buy and sell Chinese onshore bonds via its fully electronic request-for-quote (RFQ) trading link to northbound Bond Connect, with more than US$900 billion in CNY cash bonds trades conducted via its platform since the launch of Bond Connect in July 2017.

Last year, Tradeweb partnered with CFETS to deliver the fully electronic RFQ access to China Interbank Bond Market (CIBM) Direct, another route for overseas investors connecting to and trading in the Chinese onshore bond market.

Lee Olesky, CEO of Tradeweb Markets, said, “After being selected as the first platform to link to Bond Connect and China’s US$15 trillion onshore bond market, we are honoured to be chosen again as a launch partner for southbound trading.”

Yi Zhang, president of CFETS, commented, “We are pleased to be partnering again with Tradeweb to achieve Bond Connect’s fundamental objective to serve as a mutual access pathway for fixed income investors in mainland China and overseas. The success of northbound trading is proof that electronic execution is the way forward for bond market participants, and we are excited to see how it can further enhance onshore investors’ southbound trading experience.”

Through the new Southbound Bond Connect solution between CFETS and Tradeweb, onshore institutional investors should be able to conduct price discovery, trade negotiation and trade execution with Tradeweb’s network of regional and international liquidity providers in the offshore bond markets, via fully-electronic RFQ. The expansion of Bond Connect is intended to provide onshore institutions with more ways to diversify their fixed income investment portfolios.

James Sun, Tradeweb’s Head of Asia, added, “The launch of southbound trading is a significant development for Bond Connect and the result of many years of meticulous planning and hard work from CFETS and Tradeweb in China. Our teams in Shanghai and Hong Kong continue to work closely with investors and liquidity providers to ensure the success of the new trading channel, and we look forward to collaborating with them further to streamline onshore investors’ access to the international fixed income markets.”

Tradeweb has been regulated in Hong Kong and Singapore since 2004. Its first Asia local currency products – Japanese Government Bonds and Yen Interest Rate Swaps – went live in 2008. Three years later, Tradeweb expanded institutional Credit trading into Asia. In 2014, Tradeweb it engaged in an electronic JSCC-cleared yen swap transaction with a Japanese bank, followed by a regulated Yen swap trade on its Electronic Trading Platform (ETP) a year later. In 2018, Tradeweb launch portfolio allocation on the Bond Connect platform. The firm also operates an Asia-listed exchange traded fund (ETF) marketplace and an Exchange for Physical (EFP) platform in the Australian market.