|
|||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||
 Government Bond Combination Trade Was Rolled Out on January 5, 2009; A Presentation Held on December 11, 2008 December 8, 2008 To invigorate our government bond market and increase the variety of products on the market, the Electronic Bond Trading System (EBTS) of GreTai Securities Market rolled out the government bond combination trade on January 5, 2009. The pairing of newly issued and existing bonds as well as bonds of different terms in trading aims to boost the turnover of infrequently traded bonds, and on the other hand, provide investment and hedging instruments with yield curve change locked in. The government bond combination trade is a new trading strategy developed in reference to the bond trading systems of foreign markets. Dealers can use combination trade to buy or sell two kinds of government bond at the same time. The purpose is to lock in the spread between two bonds that have the same term to maturity but one is more heavily traded and the other is infrequently traded, or two bonds with different term to maturity. For example, if a dealer anticipates bigger spread between two kinds of bonds in the future, the dealer can establish a buy spread position and make a profit when the market spread widens as expected. Conversely, the dealer should establish a sell spread position. In line with the launch of the new trading system, GTSM has completed the related regulatory amendment and system construction, and plans to roll out the product on January 5, 2009. GTSM has scheduled a presentation for securities dealers on December 11.According to the GTSM, government bond combination trade has been out on many advanced markets for a number of years. It is hoped that this new trading mode will give investors more diverse trading options and bring about greater uniformity in the turnover of bonds of different terms to improve the liquidity of infrequently traded bonds. |
|||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||
