ChinaFICC

China has the world’s second largest equity and bond markets, yet foreign ownership is underweight. Regulation makes access challenging and expensive. Specific access channels are complicated to navigate and always evolving, creating new rules to comply with, new workflows to be adapted to and new counterparties to onboard. ChinaFICC’s ambition is to create a trusted, centralised infrastructure that solves once and solves for everyone, keeping all compliant to regulatory changes, bringing competitive pricing, and managing regulatory reporting and inter-party messaging, reference data and risk analysis to the execution and settlement landscape. Our first use-case seeks to address competitive access to the domestic RMB (CNY) in order to reduce hedging costs and tracking risk, providing tools to optimise order management and routing, whilst ensuring that all participants remain compliant.

The Challenge

Use of the domestic CNY needs to be validated against underlying portfolio requirements. Beyond a fund’s custodian, it is hard to do this in a robust, efficient and compliant fashion, hence funds currently find themselves stuck between a rock and a hard place: persist with CNH but incur higher hedging costs and tracking risk, or switch to CNY and lose the opportunity for price competition.

The Solution

ChinaFICC has built an innovative FX trade execution and reporting system, that pre-validates the use of CNY to unlock price competition, whilst providing a host of order routing and optimisation features to make execution efficient, effective and compliant.

The Importance

ChinaFICC calculates it can return between 15-40 bps of fund performance to China dedicated funds. Once the CNY has been solved for, ChinaFICC intends to extend its model across other restricted currencies.

Next steps

Please reach out to us directly at [email protected]

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