PBOC Launches Third Batch of Swap Facility Operations; Stock Repurchase Re-lending Becomes Permanent Arrangement
nashnova research
The PBOC is launching a third round of its swap facility with over ¥100 billion in applications, while cutting the stock-buyback relending rate to 1% and making it permanent — a twin-tool push to stabilize an A-share market still reeling from its worst monthly drop since early 2016.
What is the swap facility, and how big is this round?
The PBOC announced a third round of its Securities, Funds, and Insurance Companies Swap Facility (SFISF) — a tool that lets non-bank financial firms swap illiquid assets for central-bank liquidity. 31 firms have applied, requesting over ¥100 billion.
This means → brokerages and fund managers can convert bonds and other hard-to-sell holdings into cash earmarked for equities — effectively an indirect central-bank injection into the stock market.
The first two rounds, conducted in October 2024 and January 2025, injected a combined ¥105 billion. This third round matches that total, signaling no pullback in scale.
Buyback relending is now permanent — why does that matter?
The stock-buyback relending program has been upgraded from a temporary arrangement to a permanent institutional tool, with the rate cut to 1%.
In plain terms = companies used to borrow this money on a trial basis; now it is a standing facility at a lower rate — the financial bar for listed firms to buy back their own shares just dropped sharply.
Reuters reports the move could inject over ¥100 billion in liquidity into equities.
How far along are listed-company buybacks?
The CSRC disclosed that by end-October, 902 listed companies had announced 1,110 buyback or stake-increase loan plans. Including applications from state capital operators China Chengtong and China Reform Holdings, cumulative loan applications reached roughly ¥440 billion.
This means → participation is already broad, but the regulator is pushing for faster execution — specifically urging index heavyweights and leading tech stocks to complete "landmark" buyback cases.
This reflects a regulatory view that the gap between announcements and actual execution is the current weak link.
Why escalate now?
The immediate trigger: the CSI 300 index fell 8.5% in October alone — its steepest monthly drop since early 2016 — with a sharp tech selloff denting investor confidence.
Guotai Junan Securities Hong Kong analyst Hao Zhou (郝洲) said the move "once again sends a strong signal that policymakers are committed to maintaining capital-market stability and supporting investor confidence."
He added that global volatility and external uncertainty continue to weigh on sentiment — in plain terms = domestic and external pressures are compounding, leaving policymakers little choice but to step up support.
How did the market react, and what comes next?
Following the announcement, the Shanghai Composite rose 1.1% on Monday — its largest single-day gain since August 27 — a clear short-term sentiment boost.
This means → the market read both tools as a positive signal, but one day's rally does not equal a trend reversal.
The key variable ahead: whether a 1% relending rate can effectively spur more listed companies to accelerate buyback execution. The tools are in place; how fast and how widely they are used will determine their real impact.
市场有风险，内容仅供研究参考，不构成投资建议。