SHANGHAI (Reuters) - China's securities regulator has instructed some brokerages acting as bond market makers to continue trading despite a liquidity crunch in the market, two sources with direct knowledge of the matter told Reuters.
The China Securities Regulatory Commission (CSRC) told the market-making brokerages to continue to offer buy and sell quotations and to not set restrictions on counterparties, one of the sources said, in an attempt to ease recent liquidity stresses in the bond market.
"If market makers stop trading bonds, then segregated account investors can't trade, which will make the liquidity problem even worse," the source said.
The CSRC did not have an immediate comment when contacted by Reuters.
The price of Chinese 10-year treasury futures for March delivery rebounded by around 1 percent on Friday morning after sliding on Thursday and at one point hitting the daily downside limit of 2 percent.
Reporting by Ivy Lv, Jackie Cai and John Ruwitch; Editing by Eric Meijer