Proposed repo market reform could kick-start China CDS

Industry hopes easier shorting of bonds will help banks hedge credit protection sales

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The China Central Depository & Clearing Corporation (CCDC) is drafting new guidelines that could stimulate a stronger bond repo market in the world’s second-largest economy. As corporate bond defaults rise, participants are hoping greater bond repo volumes will facilitate better hedging of credit risk and contribute to fresh liquidity in the largely dormant credit default swap market.

“A significant issue in the repo markets, especially for foreign banks, has been the lack of clarity over the

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