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The China Foreign Exchange Trading System (CFETS) and global post-trade provider Clearstream have entered into an infrastructure cooperation to support triparty repo using ESG-compliant bonds.
The move enables Chinese market participants to trade environmental, social and governance (ESG) eligible triparty repo.
The repo trades are executed on CFETS' bond and FX trading platform on the Chinese mainland, with Clearstream serving as triparty repo agent and supporting associated collateral management, settlement and custody requirements.
The first set of triparty repo transactions were conducted by China Construction Bank, China Merchants Bank, Crédit Agricole CIB, Industrial and Commercial Bank of China and Shanghai Pudong Development Bank.
All participants selected eligible ESG bonds based on dedicated baskets provided by Clearstream.
The infrastructure cooperation aligns with Clearstream’s goal to support investors that are seeking to include ESG aspects in their investment decisions, according to Philip Brown, CEO of Clearstream Banking S.A.
Commenting on the news, Jiawen Peng, general manager of asset and liabilities management department at China Merchants Bank, says: “Repurchase transactions are an important financing tool in the interbank foreign exchange market.
“These triparty repo trades on ESG eligible foreign currency bonds are the result of joint efforts made by domestic and foreign institutions to promote the development of FX market infrastructure, which will further promote the development of green finance.”
Xiaoming Zhu, head of the Global Markets division at Crédit Agricole CIB, adds: “We have been adhering to the philosophy of actively promoting green finance, and developing more diversified green finance solutions, to support our clients to achieve their sustainable development goals.”
