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Promoting Market Liquidity and Contributing to Further Opening Up

 the Financial Sector


In recent years, under the leadership of the Party Central Committee and the State Council, major policies and plans on further opening up the financial sector have been fully implemented, accelerating the opening up of financial market and bond market in particular. National Association of Financial Market Institutional Investors (NAFMII), as the self-regulatory organization of China Inter-bank Market, while upholding the guiding principles of the Party Central Committee and the State Council, fully carries out the decisions and plans of the People’s Bank of China (PBC), keeps improving the registration and issuance system of debt financing instruments in China Inter-bank Bond Market (CIBM), takes active steps in enhancing market liquidity, and therefore contributes to further opening up the bond market.


Following the regulations promulgated by PBC, NAFMII has developed and keeps improving its self-regulation system of market making practice in CIBM. Our stipulation of the Rule on Market Making in the Inter-bank Market introduced an assessment scheme of market making practice. The assessment,  conducted on a regular basis, aims to encourage market makers to participate and improve their capacity in providing bond liquidity. Meanwhile, we keep promoting the issuance of debt financing instruments by both domestic and overseas non-financial enterprises to provide a wide range of investment instruments for overseas investors. We are also devoted to developing the credit derivatives market, broadening the product base to provide more credit risk diversification as well as hedging mechanisms, and therefore promoting the liquidity of corporate bond market.


In 2019, in order to further promote CIBM market liquidity and improve our services for overseas investors, we carried out market research with on-site visits to a number of domestic and foreign market participants. In September, we held a forum that invited PBC, the Ministry of Finance, major global bond index managers, CIBM market infrastructures and market makers to engage in focused discussions on topics of enhancing market liquidity and promoting the opening up of the bond market .


During the COVID-19 outbreak, we continued to perform daily market surveillance, kept close interaction with market participants and held multiple online panels. These measures allowed us to follow up closely on how market makers and brokers provided services to overseas investors, deepen our understanding of the needs and difficulties of market participants, and foster measures and policy advice for enhancing market liquidity.


Moving forward, NAFMII, by upholding its philosophy of self-regulation, innovation and service, will fulfill its duty under the guidance of PBC to consistently promote the long-term healthy development of CIBM. We will firstly, keep considering market needs and advice, particularly the need of bond liquidity, further improve our assessment scheme to encourage for market making of off-the-run Treasuries and other less liquid bond products, foster better market making service quality and advance market price discovering; secondly, keep a closer tie with both domestic and overseas investors and offer promptly the market suggestions and advice to the regulators, maintaining as a bridge between the government and the market; and thirdly, continue to pursue the development of derivatives market, optimize derivatives trading mechanism, engage in the innovation of standardized credit derivative product, improve related master agreements and protocols, foster investors to develop sound risk management capacity, and therefore contribute to the further opening up of the bond market.