CCDC Announces Fee Reduction for Bond Market Makers
China Central Depository & Clearing Co., Ltd. (CCDC) has introduced a new fee schedule aimed at reducing transaction costs for market makers in the interbank bond market. Effective from a future date, the settlement service fee for spot bond transactions identified as genuine market making will be cut to a 25% discount off the standard rate.
Focus on Genuine Liquidity Provision
The policy specifically targets and rewards authentic market-making activities. By lowering the operational cost for firms that consistently provide bilateral quotes and liquidity, CCDC aims to encourage more active participation, thereby enhancing overall market depth and efficiency. This move is part of broader efforts to optimize the trading environment in China's bond market.
Verification Process for Eligible Trades
To qualify for the discounted fee, transactions must be verified as legitimate market-making deals. The identification process is strict and data-driven:
- Primary Data: Transaction records must be sourced from the China Foreign Exchange Trade System (CFETS).
- Confirmation: CCDC will cross-check and confirm the data received from CFETS.
- Only trades that pass this verification will be eligible for the 25% fee reduction.
This mechanism ensures the incentive is accurately directed toward activities that genuinely support market liquidity.
Implementation Timeline
The new discounted fee rate is scheduled to take effect on July 1, 2026, and will remain in force until December 31, 2028. This clear two-and-a-half-year window provides market participants with certainty for medium-term planning and cost management.
The adjustment reflects CCDC's ongoing commitment to refining market infrastructure and reducing frictions in the bond settlement process. Lowering costs for liquidity providers is expected to contribute positively to the development of a more robust and dynamic bond market in China.