SHANGHAI Dec 8 China launched a platform for
centralized commercial paper trading on Thursday to promote and
better regulate a 100 trillion yuan ($14.54 trillion) market
that is being increasingly tapped by small businesses to meet
short-term financing needs.
The Shanghai Commercial Paper Exchange Corp Ltd, overseen by
China's central bank, is the government's latest effort to
improve its financial infrastructure, and will help consolidate
a fragmented market that has seen a series of scandals in recent
"China's CP market has been growing rapidly, and is playing
a positive role in corporate financing and forming a multi-layer
financial system," Zhou Xiaochuan, governor of the People's Bank
of China (PBOC), said in a congratulatory note, which was read
out at the launch event.
He said the exchange "will boost transparency and efficiency
of the market...and help ward off risks. It will also improve
the mechanism of macro-management, and improve the channel for
monetary policy transmission."
China's commercial paper market has expanded quickly in
recently years as the financial instrument, widely used in
business transactions, has become an important short-term
financing tool for small firms as they struggle in a slowing
In 2015, commercial paper trading volume in China's
financial system jumped 68 percent to 102.1 trillion yuan,
according to central bank data. Small- and medium-sized
companies accounted for two-thirds of banks' acceptance bills
issued that year.
But the fragmented market suffered from inefficiency, and
threatened to become a hotbed for fraud. There have been several
high-profile bill-financing scandals over the past year that
ensnared lenders such as Agricultural Bank of China
and China CITIC Bank.
The launch of the new exchange may also aid in China's
efforts on interest rate liberalization, by helping to lower
borrowing costs for companies and improving the credit system,
Zhao Cila, an official at CITIC Bank's Shanghai branch, wrote in
an analysis ahead of the launch.
The exchange provides an electronic trading platform for
instruments including banks' acceptance bills and commercial
The launch came a day after the central bank published rules
on commercial paper trading. It said the rules were aimed at
"regulating trading behaviors, warding off risks, protecting the
interest of trading parties, and promoting healthy development
of the CP market."
($1 = 6.8780 Chinese yuan)
(Reporting by Samuel Shen and John Ruwitch; Editing by Kim