PBOC’s Third SFISF Operation Draws Over 100 Billion Yuan in Bids, 24 Brokers Confirmed

PBOC’s Third SFISF Operation Draws Over 100 Billion Yuan in Bids, 24 Brokers Confirmed

TREE NEWS reports: The People’s Bank of China’s third Securities, Funds, and Insurance Companies Swap Facility (SFISF) operation has attracted strong demand, with 31 institutions submitting bids totaling more than 100 billion yuan ($13.8 billion) in intended applications—far exceeding the size of the first two rounds. At least 24 securities firms have confirmed winning allocations, with disclosed amounts already surpassing 40 billion yuan.

On November 3, major brokers including CITIC Securities and Guotai Haitong Securities each announced 10 billion yuan allocations. Others such as Guotou Securities (6 billion), Dongwu Securities (5 billion), Zheshang Securities (4 billion), Caitong Securities (3 billion), Great Wall Securities (2 billion), and Huafu Securities (1.2 billion) also disclosed awards. Several more—including Huatai, GF, China Merchants, Shenwan Hongyuan, Galaxy, Guosen, CICC, CITIC Construction Investment, Orient, Guolian Minsheng, Zhongtai, East Money, Guojin, Industrial, Ping An, and Hongta—have confirmed participation but not yet disclosed amounts.

Guotai Haitong said it will deploy the full 10 billion yuan as soon as possible to maximize the policy tool’s effect. CITIC Securities pledged to make good use of the facility and reiterated its long-term bullish view on China’s capital markets. Dongwu Securities plans to further increase holdings of stocks and equity ETFs, aiming to foster “patient capital.”

Key Changes in the Third Operation

Compared with the first two rounds, the third SFISF operation features three notable adjustments:

• Expanded participant base: The number of bidding institutions rose from 20 to 31, now including more mid-sized brokers and public fund managers, broadening the policy’s reach beyond top-tier firms.
• Lower funding costs: The bid fee remains at 10 basis points, down from 20bp in earlier rounds. A November 2 symposium signaled further cuts to swap fees and improvements to collateral rules and operational processes to reduce institutions’ entry costs.
• Stronger appetite: Total intended applications nearly match the combined 50 billion and 55 billion yuan operations of the first two rounds, underscoring market recognition of the stabilization tool.

Market Implications

The SFISF is a structural tool that allows eligible non-bank financial institutions to swap illiquid assets (such as bonds, ETFs, and certain equities) for highly liquid central bank paper or sovereign bonds, which can then be used as collateral for funding. By expanding the program and lowering costs, the PBOC is effectively injecting liquidity support into the equity market without outright purchases.

For stocks, the operation is a confidence booster. The willingness of brokers to deploy capital into equities and ETFs could provide marginal buying support, particularly for large-cap and index-heavy names. However, the actual market impact depends on how quickly funds are deployed and whether other institutional investors follow suit.

For bonds, the swap facility may ease selling pressure on bonds held by insurers and funds, as they can pledge these assets instead of liquidating them. This could support bond prices and keep yields stable, though the PBOC’s broader monetary stance remains the dominant driver.

In currencies, the operation is liquidity-neutral in foreign exchange terms, but improved risk sentiment could support the yuan by encouraging capital inflows into Chinese assets. The commodities impact is indirect, mainly through a stronger growth outlook if equity market stability boosts confidence.

For crypto, the direct effect is negligible, but a more stable Chinese equity market and easing global risk aversion could marginally benefit risk assets, including digital tokens, via spillover sentiment.

Key Takeaways for Investors

• The PBOC is doubling down on its equity market support toolkit, with the SFISF now larger and more accessible than before.
• Brokers’ commitments to deploy funds into stocks and ETFs signal near-term buying interest, but execution speed and scale matter.
• Lower swap fees and improved collateral rules reduce the cost of leveraging the facility, potentially encouraging more institutions to participate.
• Watch for further announcements from public funds and smaller brokers, which could extend the program’s reach.
• While the SFISF is not a game-changer for macroeconomic fundamentals, it reinforces policy support for capital markets and could help stabilize investor sentiment.