China central bank launches third SFISF operation with 10-basis-point bid rate
The People's Bank of China has conducted its third securities, fund and insurance swap facility operation, involving 100 billion yuan with a one-year swap period. Thirty-one securities and fund companies participated, with a winning bid rate of 10 basis points.
The People's Bank of China (PBOC) has announced the launch of its third securities, fund and insurance swap facility (SFISF) operation, with a transaction amount of 100 billion yuan (US$13.7 billion) and a swap period of one year. A total of 31 securities and fund companies participated in the bidding process, with the winning bid rate set at 10 basis points, according to the central bank.
The SFISF was first established by the PBOC in 2024 as the mainland's first monetary policy tool designed to support capital markets. The previous two operations involved amounts of 50 billion yuan and 55 billion yuan, with winning bid rates of 20 and 10 basis points respectively. The facility allows eligible securities, fund and insurance companies to pledge assets such as bonds, stock exchange-traded funds (ETFs) and constituent stocks of the CSI 300 Index in exchange for high-grade liquid assets including treasury bonds and central bank bills from the PBOC.
Analysts suggest the latest operation could help improve market risk appetite and strengthen confidence in policy support. Over the medium term, institutions that swap into high-grade liquid assets such as treasury bonds and central bank bills are expected to use the funds to purchase equities and equity-type ETFs, thereby increasing long-term capital supply in the equity market.
This increased supply could enhance the market's capacity to absorb shocks, mitigate irrational volatility driven by sentiment, optimise the investor structure, and reduce disruptions caused by short-term speculative capital, analysts say.