The China Foreign Exchange Trading System (CFETS) and global post-trade provider Clearstream have entered an infrastructure cooperation to enable Chinese market participants to trade ESG (environmental, social, governance)-eligible triparty repo bonds. The repo transactions are facilitated by CFETS’s exclusive bond and FX trading platform in mainland China, while Clearstream acts as triparty repo agent, streamlining collateral management, settlement and custody.

First trades were successfully performed by China Construction Bank, China Merchants Bank, Crédit Agricole CIB, Industrial and Commercial Bank of China and Shanghai Pudong Development Bank. All participants chose all eligible ESG bonds based on dedicated baskets provided by Clearstream. Leveraging triparty repo bonds, investors will benefit from diversified sources of funding, combined with a high degree of safety as well as outsourced collateral management and administrative functions.

Philip Brown, CEO of Clearstream Banking S.A., commented:

“As a leading provider of global post-trade services, it’s at the heart of Clearstream’s mission to support investors around the globe who are seeking to include environmental, social, and governance aspects in their investment decisions. The cooperation aligns perfectly with this goal. We are excited, together with our renowned partners, to provide innovative, stable and internationally connected financial infrastructure to the largest market in Asia.”

Changfa Zhu, General Manager of Global Markets Department, Industrial and Commercial Bank of China, added:

“Triparty repo, as a common type of repo transaction in the global financial market, by tapping into the collateral management service of third-party professional institutions, contributes to a higher-efficient and lower-risk way of involvement in repo business by market participants. FX triparty repo with green bond as the collateral, while adding a new variety of repo trade to the onshore market, also manifests the development concept of green finance. Looking into the future, we would like to join the hands of financial peers to promote the development of onshore FX repo business and green finance.”