China’s central bank launches 500 billion yuan swap facility to help stock market By Reuters

HONG KONG/SHANGHAI (Reuters) – China’s central bank said on Thursday it will start accepting applications from financial institutions to join a newly created financing scheme with an initial amount of 500 billion yuan (70.62 billion of dollars), to help the capital market.

The People’s Bank of China (PBOC) said eligible securities firms, fund companies and insurers can apply to join the swap scheme, which gives them easier access to financing to buy shares.

The announcement came after Chinese stocks fell on Wednesday following a blistering rally as earlier investor enthusiasm for Beijing’s plans to revive the economy waned.

The PBOC first announced the scheme on September 24 as part of a broad policy package to stimulate the economy and boost capital markets.

Under the swap facility, eligible securities firms, fund companies and insurers can use their assets, including bonds, equity ETFs and holdings in components of the CSI 300 index as collateral in exchange for highly liquid assets such as bonds treasury and central bank securities.

The initial scale of the swap program is set at 500 billion yuan and may be expanded in the future.

($1 = 7.0800)