The central bank yesterday outlined a plan to boost domestic bond trading by lowering the requirements for market makers in the interbank market.
The new measures, which go into effect on February 1, allow any of the country's top 80 bond traders to apply to become market makers, provided they have registered capital of more than 1.2 billion yuan.
'Increasing the number of market makers will promote market liquidity and efficiency,' said Lin Zhaohui, an analyst at Guotai Junan Securities. 'Some buyers have trouble finding sellers and vice versa.'
Under the new rules, market makers must be ready to deal in amounts of at least one million yuan and provide prices within 30 minutes after being asked.
They will also have to provide prices for at least six bonds, including one corporate bond, one government bond and one financial development bond and post prices for at least four of the five maturities in the market, which range from less than a year to more than seven years.
Turnover in the interbank bond market was 36.6 trillion yuan last year, 21.9 trillion yuan in 2005 and 11.8 trillion yuan in 2004.