Recently, based on free trade accounts of Shanghai Free Trade Zone, IB smoothly completed the overseas issuance of foreign currency negotiable certificates of deposit (NCDs) with a total of $50 million, marking that the first U.S. Dollar NCDs of deposit financial institutions in China’s Free Trade Zone was launched in international financial market.
With a duration of three months, these NCDs will be under custody via EURO CLEAR according to international practice. These NCDs were mainly issued by IB’s branch in Shanghai Pilot Free Trade Zone. Unlike NCDs issued in the Free Trade Zone, this issuance was made in overseas market by financial institutions in Free Trade Zone, strengthening the interconnection between financial institutions in Free Trade Zone and overseas market.
A broker analyst in Shanghai told the journalist that this issuance laid a solid foundation for financial institutions in Free Trade Zone to finance in international financial market, reflected that financial institutions in Shanghai Free Trade Zone are recognized by international market and opened up a new way for deposit financial institutions in China’s Free Trade Zone to conduct cross-border financing.
“At present, China is in the essential stage of reform of exchange rate formation mechanism and globalization of RMB. Introducing foreign currency capital to China through banks is encouraged and advocated by our government and will enhance the stability of China’s financial market, especially foreign exchange market.” Ma Dajun, general manager of IB Capital Operation Center, said that as a mature monetary market tool, foreign currency NCDs issued in international market can help deposit financial institutions raise fund flexibly and supplement liquidity according to needs of international monetary market and their own asset-liability management of local and foreign currency.
Since IB Capital Operation Center accepted and passed the inspection of access to the ledger accounting unit system of PBC Shanghai head office in June 2015, the bank has, by utilizing FT accounts, given expression to advantages in financial market business and constantly explored the new blue ocean in FTZ as well as cross-border financial market. In April 2016, IB concluded the first FTZ interest rate swap transaction, which was listed among the sixth batch of financial innovation cases in (Shanghai) Free Trade Zone, China. The first issuance of U.S. Dollar NCDs was also initiated and promoted by IB Capital Operation Center and indicated that fresh breakthroughs were made in cross-border financing of financial institutions in Free Trade Zone.