Top ten events astound Shanghai's financial sector in 2017

China's metropolis Shanghai accelerated its pace of development as an international financial center in 2017. Various efforts were made including continuing to pursue financial innovation, strengthening financial services to the country's Belt and Road Initiative strategy, and enhancing financial risk control and prevention.

According to the 22nd edition of the Global Financial Centres Index released by Z/Yen Group on Sept 11, 2017, Shanghai's ranking rose to sixth in the world, indicating global investors' confidence in Shanghai's international financial center construction.

The China Financial Information Center and the Shanghai branch of the China Economic Information Service reviewed the city's efforts in the financial sector in 2017 and released the following top 10 events on Jan 3.

1. A guideline for Shanghai's financial work released 

The Shanghai municipal government announced a guideline for the city's financial work on December 2017 in hope of accelerating the construction of the Shanghai International Financial Center. The three major tasks of serving the real economy, controlling and preventing financial risks, and deepening financial reform were set. Meanwhile, the city has launched several special actions to regulate internet finance and various trading platforms, and to crack down on illegal fundraising.

2. The Mainland-Hong Kong Bond Connect starts trial operation

The Mainland-Hong Kong Bond Connect began trial operations in July 2017, allowing investors from both sides to trade bonds on each other's inter-bank markets.

Qualified overseas investors are able to buy bonds in the mainland inter-bank bond market, either with Chinese yuan or foreign currencies.

The qualified investors include foreign central banks, sovereign wealth funds, international financial organizations, Qualified Foreign Institutional Investors (QFII), RMB Qualified Foreign Institutional Investors (RQFII), and financial agencies including commercial banks, insurance companies, securities brokerage houses and fund management companies.

By the end of November 2017, 65 foreign central banks and 291 foreign commercial institutions had invested in inter-bank bond markets.

3. Construction of the second phase of the Cross-border Interbank Payment System accelerated

The construction of the second phase of the Cross-border Interbank Payment System (CIPS) has proceeded well. Its bilateral business began in September 2017, and the entire project is expected to start operation in 2018. To date, CIPS has had 31 direct and 677 indirect participants.

CIPS is a payment and settlement system created by the People's Bank of China (PBOC) in 2015 to provide safe, easy, and efficient settlement services for global financial institutions doing cross-border and offshore business using the Chinese yuan, or renminbi. It is considered a significant financial infrastructure for promotion of the internationalization of the renminbi.

On the basis of the first phase, the second phase will advance the development of cross-border renminbi business with more functions, more efficient services, and a more globalized settlement network.

4. The issuing bodies of yuan-denominated bonds in Shanghai's financial market are diversified

In March 2017, United Co Rusal, the biggest Russian aluminum maker, issued 1 billion yuan of panda bonds at the Shanghai Stock Exchange, the first panda bond issued by enterprises in countries and regions along the Belt and Road Initiative route.

A panda bond is a renminbi-denominated bond from a non-Chinese issuer.

In 2017, enterprises, banks, sovereign nations, and many other bodies began issuing panda bonds in bourses and inter-bank bond markets to contribute to the Belt and Road Initiative construction.

5. Systems for trust registration, commercial paper trading, property co-insurance trading launched

China Trust Registration Co started the operation of a trust registration system in September 2017, an improvement of trust registration infrastructure and a new beginning for China's trust industry.

The Shanghai Commercial Paper Exchange took over the Electronic Commercial Draft System (ECDS) in October 2017. This move helped China's commercial paper market transform and upgrade to electronic trading.

The Shanghai Insurance Exchange launched a property co-insurance trading and settlement platform in December 2017, which will improve the market's operational efficiency and fluidity and strengthen supervision on transactions on exchange. This move also marks the beginning of a new centralized trading and settlement model among China's insurance institutions.

6. China Central Depository & Clearing Co Shanghai Headquarters inaugurated

The China Central Depository & Clearing Co (CCDC) opened its Shanghai headquarters and a collateral security business center in December 2017, five months after the China Bond Financial Valuation Center landed in Shanghai.

The arrival of the CCDC Shanghai headquarters brings together five functional platforms -- a cross-border bond issuance center, a cross-border bond settlement center, the China Bond Collateral Security Business Center, the China Bond Financial Valuation Center, and the Shanghai Data Center. Also, it helps improve Shanghai's financial market system, and serves the global renminbi-denominated bond market.

7. China's first negative list to guide the opening up of Shanghai FTZ's financial service industry released

A negative list to guide the opening up of financial service industry at the China (Shanghai) Pilot Free Trade Zone was released in June 2017. The list outlines areas where foreign investment is prohibited, makes the opening up of the financial industry more transparent and operable, and shows Shanghai's determination to deepen and enhance financial opening up.

Meanwhile, the scope and functions of free trade accounts have been expanded, allowing tech companies and talented personnel brought in from abroad to serve Shanghai's international scientific and technological innovation center construction.

8. The support of financial industry to Shanghai's scientific and technological innovation center construction strengthened

The Shanghai Scientific Innovation Center Equity Fund Management Co was inaugurated in September 2017. As a government-led, market-oriented municipal-level parent fund, it aims to raise a fund of 30 billion yuan, and its first stage raised 6.52 billion yuan.

Shanghai has formed a financial technology service network covering the entire city. The loan balance of the city's tech enterprises exceeds 200 billion yuan. The Technology Startup Board of the Shanghai Equity Exchange continues to develop with listed companies numbering 172, which have raised funds of 1.9 billion yuan.

9. CCP12 released "Bund Standard"

The Global Association of Central Counterparties (CCP12) released the first international standard of the clearing industry at the Bund in Shanghai in November 2017, showing Shanghai's significant role in making international financial supervision policies and setting industry standards. This move also helped increase China's influence in those areas. CCP12 landed in Shanghai in June 2016, and started operation in January 2017.

10. The 2017 China (Shanghai) Financial Talent Index released

The 2017 China (Shanghai) Financial Talent Index was released in Shanghai in December 2017. The index, sponsored by the China Economic Information Service, was officially launched in June 2017. It targets the seven financial sub-industries of banking, securities, insurance, fund, trust fund, futures, and third-party payment. It analyzes the educational background and income of talents in those industries, and monitors and predicts their development on a scientific basis.