China to bring in when-issue bond trading

When-issued trading – transactions that take place in a security that has been authorized but not yet sold or issued – will be introduced into China's bond market in the third quarter. Zhou Chengyue, deputy chief of the Ministry of Finance's treasury department, revealed the timetable on Friday at a meeting with the main underwriters of treasury bonds, the Wall Street Journal reported. Analysts say when-issued trading will help ensure accurate and coherent pricing of new bonds in the primary market. One trader said the ministry would most likely use a medium-term bond of five to seven years in length. Last year, it sold US$89.6 billion in bonds, 41% of which had maturities between five and 10 years, according to the official Chinabond website.