China bond trades hit by suspension of pricing data

Traders in the world’s second-largest bond market are struggling to complete deals, as Chinese authorities’ suspension of data feeds to price aggregators fuels concerns about the impact of last week’s regulatory overhaul.

The suspension of real-time quotes has forced traders to rely on messaging apps such as Tencent’s WeChat and QQ to agree on prices for deals in the interbank bond market, which accounts for 87 per cent of the Chinese market, according to Reuters data.

The China Banking and Insurance Regulatory Commission told some money brokers this week to stop offering data feeds to aggregators, according to an executive from one broker and another at a data platform. At least three of the six brokers overseen by the CBIRC have been told to stop providing data, they said.

The CBIRC oversees brokers including the joint venture between Tullett Prebon and NEX International as well as BGC Partners and Central Tanshi.

The guidance follows a move this month towards tighter regulatory oversight of data. China announced plans to set up a national bureau to oversee data strategy and another body to supervise all financial activities except securities businesses. The restructuring and tougher rules on data security have created confusion over who supervises data and who has the right to sell data.

The surprise suspension has had a huge impact on bond transactions, a Shanghai-based fixed-income trader at a midsized Chinese fund manager said.

“I’m almost blind,” the trader said, complaining about the reduced deal flows and invisibility in fixed-income trades. “The market becomes more unpredictable these days, either flat or with huge volatility.”

Many traders are now relying on the Tencent messaging apps that they had last used a decade ago for quotes and trades. The method — gathering bond quotes in private chats — is not only inefficient but has also been subject o regulatory crackdowns in other international bond markets.

Turnover in China’s $18tn interbank bond market dropped 9 per cent from Rmb1.4tn to Rmb1.2tn ($174bn) on Wednesday, according to the latest available data from the National Interbank Funding Center. The interbank market is the main trading ground for China’s $21tn bond market.

The feed suspension also left foreign investors at a loss. “Chat group quotes are in Chinese mostly,” said Hong Hao, chief strategist at hedge fund Grow Investment Group. “If they don’t know Chinese they don’t get quotes. It’s like trading in the dark.”

Qeubee, one of the most popular price aggregators, said it was still negotiating with money brokers on when and how it could resume its operations, according to an internal notice seen by the Financial Times that was sent to its users on March 14.

Wind Information, another data aggregator, said on its official WeChat account on March 15 that it could still offer some quotes. Ideal, a rival platform run by a central bank affiliate, is also offering live prices from two money brokers.

Ideal “doesn’t cover all the quotes”, said a Shanghai-based bond trader at a joint-venture fund house. “Even on Wind, I can only see the quotes from exchanges but can’t see the price from the interbank.”

“There will be alternative solutions, we just need some time to figure out issues related to data,” said an official at the Shanghai stock exchange.

The CBIRC did not immediately respond to a request for comment. Ningbo Sumscope Information Technology Co, which operates the Qeubee data platform, and Wind Info, also did not immediately respond to requests for comment.

Additional reporting by Andy Lin in Hong Kong