CHINA has relaxed rules for some long-term foreign investors in its interbank bond market by removing the limits on the sizes of investment, a move that may deepen the Chinese financial market.

    But some investors warned it may be some time yet before the measure, which came less than a week after China intervened heavily in its stock market to prevent a meltdown, takes effect and increases investment opportunities.

    Foreign central banks, financial institutions and sovereign wealth funds that are approved investors in the interbank market can now buy or sell bonds, bond forwards, interest rate swaps and conduct bond repurchases, the central bank said. The rules are effective from Tuesday.

    These foreign investors “should be long-term investors” and can decide for themselves how much to invest, the People’s Bank of China said in a statement.

    “This is mainly about removing limits on sizes of investment for these foreign investors,” said a bond trader in Shanghai.

    Given that trades done by foreign investors require counterparties, some of which face restrictions on the sizes of their investments, a banker at a mid-sized Chinese bank said it could be a long time yet before the market is actually freed up.

    Granting foreign investors greater access to China’s capital markets is a long-running theme in the country’s quest to reform its economy and turn into one more reliant on free markets, and less dependent on central planning. (SD-Agencies)