In 2009, trading value in China’s interbank bond market reached US$7.2 trillion, a 19.7% increase from 2008. Celent expects continued liberalization of China's fixed income market to create new opportunities for trading.

In a new report, Fixed Income in China: The Secondary Market, Celent examines the market size, structure, investors, market trends, settlement, and regulations in this emerging market.

Commercial banks and insurance companies are the largest participants in China's bond market, led by the large state-owned banks. Celent estimates brisk growth in fixed income trading in 2010, led by a recovery in bond trading by mutual fund companies, with the share of commercial banks declining relative to other investor categories. Trading in asset-backed securities and MBS will remain low.

“Fixed income regulation in China has the following thrusts: pushing for a variety of bond products by relaxing guarantee requirements for corporate bonds; strengthening risk controls by requesting that commercial banks provide more information on their fixed income investments; and loosening controls on foreign institutions by allowing foreign banks to conduct bond underwriting and trading,” says Hua Zhang, Analyst with Celent’s Asia Financial Services group and author of the report.