Euroclear Bank and Shanghai Clearing House create new asset class

Brussels/Shanghai, 8 December 2020 – Euroclear Bank, the Brussels based International Central Securities Depositary (ICSD) and the Chinese financial market infrastructure Shanghai Clearing House have worked together to create a new asset class in China, called Yulan bonds.

Yulan bonds will be issued through Shanghai Clearing House with international investors able to benefit from real time multi-currency DVP settlement with any counterparty within Euroclear Bank’s network. Chinese issuers will now be able to access a deeper liquidity pool in a cost efficient way.  

The Yulan bond initiative builds upon an already longstanding relationship between Euroclear and the Shanghai Clearing House, dating back to 2009, when both signed a Memorandum of Understanding (MoU). Under the MoU, Shanghai Clearing House and Euroclear agreed to explore business models to further improve and facilitate investment flows between China and the international markets. 

Valerie Urbain, CEO of Euroclear Bank said, “We are extremely proud to be part of this initiative with Shanghai Clearing House and have the full support of the People’s Bank of China in this milestone achievement. Euroclear has been active in the Asia Pacific region for over 30 years, with a continued strong presence.  As a financial market infrastructure, we have always maintained the strategy of bringing markets together through our open, flexible architecture to strengthen capital markets and connect local issuers with international investors.”

Xie Zhong, Chairman of Shanghai Clearing House said, “Euroclear Bank is a long-standing partner of Shanghai Clearing House. Both parties have maintained a close collaboration and carried out rich and practical discussions in the field of bond issuance, registration, custody, settlement and collateral management.  The Yulan bond launch is a result of cooperation between Shanghai Clearing House and Euroclear Bank closely following market demand. Based on the Yulan bond initiative, both parties will continue to optimise the business flow and explore more diversified cross-border cooperation modes, to further assist financial market participants.”

About Euroclear Bank 

Euroclear Bank provides settlement and related securities services for cross-border transactions involving domestic and international bonds, equities, derivatives and investment funds. Serving major financial institutions located in more than 90 countries, Euroclear Bank, based in Brussels, is part of the Euroclear group. Euroclear Bank is rated AA+ by Fitch Ratings and AA by Standard & Poor’s. 

As well as Euroclear Bank, the Euroclear group includes Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & Ireland. The Euroclear group settled the equivalent of EUR 837 trillion in securities transactions in 2019, representing 239 million domestic and cross-border transactions and held an average of EUR 30.1 trillion in assets for clients. www.euroclear.com

About Shanghai Clearing House

Shanghai Clearing House (SHCH) was established on November 28, 2009. It is a systemically important financial market infrastructure regulated by the People's Bank of China (PBC). It is one of the Central Securities Depositories (CSD) in China and also recognized as a Qualified Central Counterparty (QCCP) by PBC. 

Committed to becoming a "standardized, market-oriented and internationalized" institution, SHCH actively pushes forward registration, custody and settlement services as well as CCP clearing. At present, SHCH provides a one-stop solution of registration, custody and settlement services for innovative financial products, such as corporate credit bonds, financial bonds, money market instruments and structured products. SHCH has established a CCP clearing service system in China's OTC financial market, covering bonds, interest rate, foreign exchange, commodity and credit derivatives. In 2019, custody balance by the end of the year amounted to 22.4 trillion RMB and the amount of clearing business of SHCH reached 363.0 trillion RMB.