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China Is Said to Defer Bond Trader Pay Above $154,000 a Year

  • Deferred compensation to be handed out over at least two years
  • Move comes amid broader campaign to reduce leverage in bonds

China capped how much bond traders at brokerages and fund companies can earn from a year’s work to 1 million yuan ($154,000), people with knowledge of the matter said, as regulators step up a campaign to control risk-taking across financial markets.

Payouts above that threshold can be paid in part the following year, but must be spread out over at least two years, according to the people, who asked not to be named because they are not authorized to talk publicly about the matter. The deferrals mean individuals could receive an annual total of more than 1 million yuan in future years. It isn’t clear what would happen if a trader were to leave before receiving their full payout.

The rule was issued by the China Securities Regulatory Commission last month, according to the people. Traders have been notified of the new policy by their firms, some of them said.

The CSRC didn’t respond to a request seeking comment. The news was reported on Thursday by Securities Times, a financial and securities publication managed by the Communist Party mouthpiece People’s Daily.

The move comes amid a broader effort to reduce leverage in the bond market. The People’s Bank of China said this week that market participants should “reasonably” control their bond trading leverage, while the Securities Times also reported that regulators have called on brokerages and fund companies to tighten their oversight of trading and personnel, as well as management of holdings.

— With assistance by Gary Gao, and Steven Yang

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