On April 28th, Risk Management of China Non-financial Debt Capital Markets Summit, which was sponsored by National Association of Financial Market Institutional Investors (NAFMII) and co-sponsored by six institutions - China Development Bank (CDB), The Industrial and Commercial Bank of China(ICBC), CITIC Securities Co., Ltd. (CITICS), China International Capital Corporation (CICC), Deutsche Bank and Citibank, was successfully convened in Beijing. At the forum, Liu Shiyu, Deputy Governor of People’s Bank of China, delivered a keynote speech, and Yang Kaisheng, President of NAFMII and ICBC, delivered a closing address.

Among those present at the forum were relevant officials and leaders from government departments/agencies such as Office of the Central Leading Group on Financial and Economic Affairs of CPC, Policy Research Office of CCCPC, Financial and Economic Affairs Committee, Law Committee, Supreme People's Court, General Office of the State Council, Legal Affairs Office of the State Council, Research Office of the State Council, National Development and Reform Commission, Civil Ministry, Financial Ministry, People’s Bank, Development Research Center of the State Council, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission), as well as from organizations like Banking Industry Association, Securities Industry Association and Insurance Industry Association. In addition, leaders from HK Monetary Authority, International Capital Market Association (ICMA) and Japan Securities Development Association (JSDA), as special guest speaker, addressed the forum. More than 200 representatives from over 100 institutions, including Sino-foreign banks, securities houses, insurance companies, mutual funds and enterprises, took part in the forum.

With risk management in the bond market as the theme, the Summit is composed of three parts in which experts and scholars shared their views and opinions with representatives on some important issues, including credit risk control in the bond market, optimization of investor structure in China bond market and the construction of investor protection mechanism in China bond market by means of combining theme speeches with panel discussions.

Liu Shiyu, Deputy Governor of People’s Bank of China, pointed out in his speech that while the bond market has seen some headway, the development speed, rules and products still lags behind the requirements of economic operation. As such, we must earnestly study and implement the Spirit of the Fifth Plenum of the 17th Central Committee of the Communist Party of China, the Guidelines for 12th Five-year Plan and the requirements in this year's government working report to put high priority on urgent and fundamental mechanisms and products of nationwide significance in market development and innovation efforts, so as to accelerate the establishment of multi-level capital market system and give full play to the role of the market as fundamental force in resource allocation. In his speech, Mr. Liu also expressed government efforts to support innovative ways in directional issuance, vigorously develop asset securitization and steadily launch municipal bond. Mr. Yang Kaisheng said in his closing address that the successful convocation of this Summit marks a new beginning of the country’s interbank bond market development, and the fruitful results of it will be conducive to the healthy development of China bond market and the establishment of right attitude toward risks and improvement of risk management capabilities in China bond market.

According to experts and scholars present at the forum, great progress has been made in China bond capital market in terms of market size, product and system innovation, infrastructures and market-oriented restraint mechanism. However, investors hold biased understanding of credit risks in the bond market, lack effective technology and means to counter credit risks and therefore feature low overall risk management level, which, to some extent, has negative effect on our efforts to optimize resources allocation in the bond market and functionalize macro-economic control policies as regulatory platform. In the context of complicated and changing situations both at home and abroad in the post-crisis period, it is especially necessary to enhance efforts to educate investors, cultivate their risk awareness, help improve their bond credit risk management capabilities, and intensify effective risk management in the bond market.

Experts and scholars hold that scientific and rational investor structure is the important prerequisite for diversifying credit risks and promoting the healthy development of the bond market. Recently, the investor structure in China inter-bank bond market has been gradually optimized with more varied and wider range of participants. However, such problems as relatively monotonous investor structure and risk preference convergence still exist, impairing risk diversification and liquidity improvement in the bond market. Therefore, it is quite necessary to remove unreasonable institutional barriers for investors to participate in the market, expand their investment range and business autonomy in the bond market and further optimize investor structure by introducing more types of investors into the market and enhancing their investment willingness.

It is widely believed by the participating representatives that there are risks in the market, which is decided by the nature of the market, and risks are not formidable. Market players should constantly improve their understanding and practice on risk management function of the financial market, and in particular, intensify innovation in and application of financial instruments for risk control. Risk is objectively existed in the financial market. As long as we can diversify risks to investors that can afford and are willing to take such risks, we can effectively control them and safeguard the stability of the financial system. Market-oriented risk sharing mechanism is very mature in overseas markets, which centers on the application of risk management instruments. At present, an innovative risk control instrument - CRM suitable to the features of China financial market has emerged in China inter-bank bond market. With CRM, investors can accurately value and effectively diversify risks. However, as a new type of risk control instrument, CRM is currently applied in a limited scope due to low recognition by the market, and its risk sharing role is not given full play. The launch of CRM marks the availability of financial risk control instrument in China, but how to help these instruments grow bigger and stronger requires the concerted efforts of competent government departments, regulatory authorities and market players to create environment favorable to innovation and application of risk control instruments in China financial market.

The successful convening of the Risk Management of China Non-financial Debt Capital Markets Summit provides a high-level platform of interaction and exchange for competent authorities, experts and scholars, and vast number of market members to discuss and explore risk control in China inter-bank bond market. In the future, NAFMII will earnestly implement relevant arrangements by the Party Central Committee and State Council, reinforce market discipline management and based on the principle of “self-discipline, innovation and service”, continue to gather the wisdom of market players to meet their urgent needs, so as to make its due contributions to the development of China inter-bank bond market!