China-Hong Kong bond trading scheme approved by regulators


China is taking another step to open up its financial markets to the world by allowing overseas investors access to China's $9.5 trillion bond market.

Regulators in Hong Kong and China have approved a program that will allow investors operating in Hong Kong to trade in the Chinese bond market. Initially, only "northbound" trading will be possible — investment flow from Hong Kong into China — with "southbound" flow to be considered later, according to a joint statement from the People's Bank of China and the Hong Kong Monetary Authority. Authorities also won't cap the amount that foreigners can invest in China.

The "bond connect" scheme is China's latest move to broaden access to its financial markets, which have largely been restricted to the world. Right now, less than 2 percent of China's bonds are held by foreign investors, and trading volume is typically low. By initially only allowing flow in one direction — from offshore to onshore — authorities are trying to counter the pressure of money fleeing the country and encouraging more robust domestic markets.

Read more at CNBC