China tells some brokerages to conduct compliance checks on bond trading: sources

CHINA’S securities regulator has ordered some brokerages to inspect their bond trading activities, three people with knowledge of the matter said, as authorities seek to rein in frenzied buying of Chinese government bonds.

The brokerages, all of which are domestic, have been told to conduct compliance checks on all parts of their bond trading operations, said the people, of whom two had direct knowledge of the instructions.

They were not authorised to speak to media and declined to be identified. The China Securities Regulatory Commission (CSRC) did not immediately respond to a Reuters request for comment.

A wobbly Chinese economy, long hobbled by a protracted property crisis, has sent investors – from large banks and insurers to mutual funds to rural financial institutions – pouring into the bond market as banks have kept cutting deposit rates and stocks remain volatile.

The central bank has repeatedly warned against reckless bond buying, worried about a potential bubble that could end up in a Silicon Valley Bank-style crisis. REUTERS