Why are Chinese repo markets such a critical component of RMB money market funds – and what are the benefits for corporate investors?

Cash & Liquidity Management

Why are Chinese repo markets such a critical component of RMB money market funds – and what are the benefits for corporate investors?

Published: Oct 2015

J.P. Morgan Asset Management Thought for the Month – building stronger liquidity strategies – let's solve it.

October 2015

Repos are the largest, most liquid money market instrument in Chinese markets and an important investment option for RMB money market funds.

They offer:

A low-risk investment option
Good liquidity
Higher, market-driven interest returns

Some RMB money market fund investors are concerned about repo market operations, collateral quality and counterparty risk. In this paper, we explain the market’s structure, safeguards and benefits, addressing and allaying those concerns, and making clear how and why repo has become such a critical component of RMB money market funds. Armed with a good understanding of Chinese repo markets, liquidity investors will be able to fully appreciate the vital role of repo in RMB money market funds.

Please read our white paper: China’s repo markets

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