China's central bank allots RMB100 billion in a stock swap, double the 2024 first round

China's central bank allotted RMB100 billion in a one-year swap on Tuesday, November 3, to 31 securities firms and fund managers, according to the People's Bank of China (PBOC). The amount is double the RMB50 billion of the facility's first operation in October 2024.

A Monday notice set the size of the demand

On Monday, November 2, the PBOC's Open Market Operations Office announced that it would run an operation of the Securities, Funds and Insurance companies Swap Facility (SFISF) on November 3, "with the maturity of 1 year and rollover allowed as circumstances require." The stated aim was "to support the healthy and stable development of the capital market."

The notice said that 31 institutions, including securities firms and fund management companies, had already submitted demand, "with requested amount exceeding RMB100 billion." The next day's results announcement shows an allotment of exactly RMB100 billion, conducted through rate bidding, with a winning rate of 10 basis points (0.10%).

Under the facility, set up in 2024, eligible institutions pledge assets such as bonds, stock ETFs and holdings of CSI 300 constituent stocks and receive highly liquid assets, such as government bonds and central bank bills, from the PBOC, the central bank said.

Three operations, three sizes

The PBOC's published results show how the size and participation have changed.

Operation	Allotment	Institutions in the tender	Winning rate
October 21, 2024 (first)	RMB50 billion	20	0.20%
January 2, 2025 (second)	RMB55 billion	20	10 basis points
November 3, 2026	RMB100 billion	31	10 basis points

Sources: PBOC Q3 2024 monetary policy report, SFISF announcement of January 2, 2025 and results of November 3, 2026.

The latest allotment is 81.8% larger than the January 2025 operation (computed from RMB55 billion and RMB100 billion). The winning rate matches the January 2025 result. The January 2025 tender had a highest bid of 30 basis points and a lowest of 10, the PBOC said at the time. The November 3 announcement does not give the range of bids.

The initial scale of the facility was RMB500 billion, "with possible expansions in the future," according to the PBOC's October 2024 announcement. The November 2026 announcements do not state the facility's current size or how much has been used.

A bond-market facility came eight days earlier

The swap came eight days after a different facility was announced. On October 26, the PBOC announced a Bond Market NBFI Swap Facility, to operate "under contingent scenarios where asset managers face market-wide liquidity stress and the bond market experiences systemic pressure." That tool lends central bank bills to systemically important bank wealth management subsidiaries and public fund managers for repo financing. It is a standby tool for bonds, while the SFISF operation of November 3 was run for the capital market, meaning stock holdings.

The PBOC's daily operations page also shows overnight reverse repos of RMB621 billion on November 3 at a fixed 1.25%, which fully met primary dealers' demand. The announcements do not say why the PBOC chose November 3 for the operation, and they do not link it to stock market moves.

We read the size as a signal about liquidity, not about stock prices

We think the main fact is the scale: RMB100 billion is the largest operation among the three whose results are above, and the demand from 31 institutions was higher than the amount allotted. A swap lends highly liquid assets against holdings; it does not add earnings or change what companies are worth.

The opportunity is that steadier funding can let brokers and funds hold stock and bond positions through a stress period. The threat is that a facility used repeatedly can signal that market funding is thinner than usual, and the winning rate of 10 basis points shows the central bank is pricing it cheaply. We would watch whether the PBOC publishes another operation soon, and how large it is. We would change our view if demand fell well short of the allotment in a later round, which would suggest that the pressure on institutions had eased.

The view in this final section is FinanceInTime's editorial opinion, for information only. It is not investment, tax, legal or other advice, and it does not take your circumstances into account. Forecasts are uncertain and past results do not guarantee future ones.