China will encourage financial institutions to make fuller use of two stock support tools and optimize their terms, as authorities step up efforts to bolster market stability and confidence.
The People’s Bank of China said it will conduct operations under its swap facility for securities firms, funds and insurers when appropriate. It will also increase the number of participating institutions and moderately lower swap fees, the central bank said in a statement on Monday following a meeting with financial regulators and institutions.
Separately, it will cut the rate on its relending facility for share buybacks and stake increases to 1% from 1.25%, make the program permanent and encourage banks to increase lending, the PBOC said.
The two tools were introduced in October 2024 as Beijing sought to shore up the stock market. The relending facility provides low-cost central bank funding to banks for loans that finance share buybacks and stake increases by listed companies and major shareholders.
The China Securities Regulatory Commission said in a separate statement that a third round of swap operations will begin in coming days, with 31 securities and fund firms approved to participate and applying for more than 100 billion yuan of quotas. The regulator also plans to broaden the coverage of the relending program, including by encouraging more major index constituents and leading technology companies to participate.