China told banks to stop buying bonds issued in Shanghai Free Trade Zone – report

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Chinese banks have stopped buying bonds issued in the Shanghai free trade zone after regulators increased scrutiny of the market mostly used by local government financing vehicles, reported Reuters, citing people familiar with the matter.

The PBOC in May told banks that they can only buy notes sold in the China (Shanghai) Pilot Free Trade Zone if the issuers have genuine business operations in the area, said the report.

There hasn’t been a single FTZ bond sold after June 16, according to public information.