What considerations and measures do overseas institutional investors have in terms of risk prevention when engaging in bond repurchase transactions?

Recently, the People's Bank of China, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange jointly issued a notice on further supporting overseas institutional investors to conduct bond repurchase transactions. Officials from the People's Bank of China and the State Administration of Foreign Exchange answered questions from reporters regarding overseas institutional investors conducting bond repurchase transactions in the interbank bond market. Coordinating openness and security is the foundation of high-level openness in financial markets and is also an important principle for promoting overseas institutional investors to conduct bond repurchase transactions. We will strengthen the design of overseas institutional investors conducting bond repurchase transactions in terms of trading, custody, settlement, and exchange, achieve closed-loop management of funds, and enhance penetration supervision and monitoring through trading and custodian data reports. As for counterparties, overseas institutional investors conducting bond repurchase transactions through the "Bond Connect" channel will initially adopt the existing bond trading mechanism and conduct bond repurchase transactions with market makers. Market makers should have strong funding and bond pricing capabilities, be selected from excellent public market primary traders in the "Bond Connect", and be announced by the National Interbank Funding Center. In terms of quota management, the fund lending limit for market makers complies with the unified management framework for cross-border RMB interbank financing businesses. The management of overseas institutional investors' outstanding repurchase balances shall be implemented in accordance with the leverage ratio regulations for buyback transactions in the interbank bond market, with specific requirements to be clarified by the infrastructure of the interbank market.