China data backtrack in USD 21 trillion bond market sparks relief and concern

SHANGHAI, March 17 (Reuters) – Two days of chaos in China’s USD 21 trillion bond market ended on Friday after Beijing allowed money brokers to resume providing data to third-party platforms, bringing relief for traders but also raising questions over the regulators’ stance on data.

The abrupt u-turn saw brokers’ real-time bond price data reappear on most financial information platforms on Friday, including Wind and Dealing Matrix, traders told Reuters.

Regulators had on Wednesday barred the brokers from providing data feeds, citing data security. Turnover in the interbank bond market tumbled 9% on Wednesday and another 16% on Thursday as traders had trouble accessing price information with many turning to QQ and WeChat messaging groups to trade.

“I felt like I was blind,” said one trader. “I had no idea whether the market was rising or falling.”

The episode and lack of explanation risks further undermining business confidence in China at a time when many companies are trying to understand and adapt to Beijing’s tightening oversight over areas from finance to technology, analysts said.

China has in recent years grown more concerned over data security and rolled out new laws and compliance requirements for firms. Earlier this month it announced it would form a new national data bureau but has yet to give further clarity on how it will work.

“Already in the past year, and in particular the past few months there’s been quite a bit of confusion about the compliance requirements in terms of data security, and more than a little bit of trepidation about what they might mean for business,” said Tom Nunlist, a data policy analyst at research firm Trivium China.

“Until we see a more detailed explanation of what happened here, this increases the sense of compliance unpredictability,” he said.

DRIVEN CRAZY

The China Banking and Insurance Regulatory Commission (CBIRC), which regulates money brokers, has not responded to requests for comment on the data feed ban or its reversal.

The u-turn came after China’s central bank and the CBIRC summoned money brokers and some banks on Thursday afternoon to discuss the policy impact, financial news magazine Caixin reported on Friday.

“Can you imagine how happy I am after experiencing such deep sorrow?” said a bond trader, adding that the feed cut had driven her crazy looking for alternative sources of price information.

The ban was lifted for most money brokers, including the joint ventures of NEX International Ltd, BGC Partners (BGCP), Central Tanshi and Compagnie Financiere Tradition (CFT).

Popular platform qeubee, owned by Ningbo Sumscope Information Technology Co and money broker Tullett Prebon SITICO (China) Ltd, which supplies bond price data to Sumscope, remained subject to the data feed block. It was not immediately clear why.

The policy reversal suggests the industry-wide ban on data feeds was ill-conceived, traders said, while one bond fund manager criticized how the ban created fresh problems in the market, but the government didn’t offer any solution.

Some traders and analysts drew a parallel to a previous policy reversal in 2016, when China suspended its newly introduced stock market circuit breaker after the mechanism sparked sharp falls in share prices.

(Reporting by Brenda Goh and Winni Zhou; Additional reporting by Jason Xue and Samuel Shen; Editing by Muralikumar Anantharaman, Edwina Gibbs, Tom Hogue and Simon Cameron-Moore)