BEIJING, Nov. 2 (Xinhua) -- China will step up the use of monetary policy tools to support its capital market, strengthen market resilience and boost investor confidence, its central bank announced Monday.
The People's Bank of China (PBOC) said that it will conduct the third operation of the Securities, Funds and Insurance companies Swap Facility (SFISF) on Tuesday, aiming to help financial institutions secure funding and boost their capacity to buy stocks.
The operation will have a swap term of one year, with the possibility of extension depending on circumstances, according to the PBOC.
A total of 31 securities and fund companies have submitted applications for the facility, with the amount requested exceeding 100 billion yuan (about 14.89 billion U.S. dollars), the announcement said.
Introduced in October 2024, the SFISF allows eligible securities, fund and insurance companies to use assets, including bonds, stock exchange-traded funds and shares in companies on the CSI 300 Index, as collateral in exchange for highly liquid assets, such as treasury bonds and central bank bills. The facility is designed to improve participating institutions' access to funding and enhance their capacity to increase stock holdings.
Industry insiders believe the steady implementation of the swap facility will help put existing assets to better use, facilitate liquidity management across markets such as stocks and bonds, and provide a sustained flow of fresh liquidity to the capital market, thereby encouraging longer-term investment and strengthening the market's inherent stability.
In a statement released Monday, the PBOC said it had held a meeting with the National Financial Regulatory Administration and the China Securities Regulatory Commission (CSRC), calling for more effective use of the SFISF and the relending facility for share buybacks and shareholding increases.
The PBOC said it will conduct SFISF operations in a timely manner, expand the number of participating institutions, appropriately lower swap fees, and optimize the collateral and operational arrangements.
"We will work with the PBOC to guide relevant market participants in making full use of the two policy tools and coordinate efforts to support market stability," an official with the CSRC said in response to a media query.
The relending facility, launched in 2024 as a temporary measure, will become a long-term arrangement. Its relending rate will be cut from 1.25 percent to 1 percent. Financial institutions are to follow market-based pricing principles, set lending rates reasonably based on the relending rate, and expand lending under the facility.
The central bank conducted the previous two SFISF operations in October 2024 and January 2025, with a combined volume of 105 billion yuan, official data showed.
Meanwhile, loans for share buybacks and shareholding increases have reached about 440 billion yuan in signed agreements, with more than 280 billion yuan already disbursed, helping listed companies finance their market capitalization management activities.
The three departments will step up policy support to stabilize the capital market, strengthen its resilience and boost market confidence, while refining policy arrangements and implementation rules and encouraging financial institutions to make full use of the tools, according to the PBOC statement.
The CSRC official said the commission would expand the scope of the relending facility for share buybacks and shareholding increases by listed companies.
The CSRC will urge listed firms that have disclosed repurchase and share increase plans to accelerate implementation progress, and those that have applied for loans to intensify their repurchase efforts, thus sustaining the current sound momentum of stock repurchases and contributing to the stability of the capital market, it said.
"Stock repurchase is an important tool for listed companies to manage their market value, and a key means to stabilize stock prices and convey development prospects and confidence," the official said.
In the first 10 months of this year, 645 listed companies on the Shanghai and Shenzhen stock exchanges disclosed 700 share repurchase plans totaling 237.7 billion yuan, with the amounts of planned repurchases and actual repurchases both hitting record highs, according to the CSRC. ■
