WSJ explains Chinese “dai chi” bonds, a repo variation

Behind China’s Bond Selloff, a Risky Twist on the Repo Trade

Trading practice called ‘dai chi’ sprouted up in China’s long credit boom—and has helped exacerbate the bond-market rout

The turmoil at a Chinese midsized brokerage firm that exacerbated China’s recent bond market rout also highlighted a little-regulated practice that companies have used to borrow hundreds of billions of dollars and move risky assets temporarily off their books.

Called “dai chi” in Chinese — literally, holding something on someone’s behalf — the trading practice resembles a short-term loan backed by bonds, and it has boomed as China’s bond market rallied during the past three years, according to half a dozen traders and executives at Chinese financial companies who have engaged in or are familiar with the practice.

The full article is available here.

Related Posts

Previous Post
Convergex adds Fully Paid Lending and US$1b in new assets for prime brokerage
Next Post
Australian regulators propose new securities lending, repo and margin data collection

Related Posts

Fill out this field
Fill out this field
Please enter a valid email address.

Menu
X

Reset password

Create an account