Recently, the PBOC launched the securities, funds, and insurance companies swap facility (SFISF). To ensure smooth implementation, the PBOC and China Securities Regulatory Commission (CSRC) jointly issued the Notice on Implementing the Securities, Funds, and Insurance Companies Swap Facility on October 18, which specifies the business procedures, operational elements, and the rights and obligations of both trading parties.

The PBOC has designated China Bond Insurance Corporation as the specific primary dealer of open market operations to conduct swap transactions with eligible securities, funds, and insurance companies. The term of the swap is one year, which may be extended as appropriate. Swap rates are decided through bidding of participating institutions. Eligible collateral includes bonds, stock ETFs, constituents of the CSI 300 Index, and public REITs, with haircut rates differentiated according to the risk characteristics of the collateral. The funds obtained under the SFISF should be used exclusively for investments in the capital market, to be more specific, for stock and stock ETF investments and market-making.

Up to date, 20 securities and fund companies have been approved to participate in the swap facility, with the first batch of applications exceeding RMB200 billion. Starting from today, the PBOC will officially initiate operations based on the needs of participating institutions, so as to support the stable development of the capital market.