At a time when fixed income investments across the globe are seeing plenty of activity, China, the world's largest domestic bond market player is seeking to join in. In February 2016, China's authorities announced that a wide range of foreign institutional investors - including commercial lenders, insurance companies, securities firms and asset managers - would be given quota-free access to the Chinese interbank bond market. This marks an expansion on the move by the People's Bank of China in July 2015 to relax rules on foreign central banks and sovereign wealth funds, allowing them to trade in the CIBM without quota limits and with registration rather than pre-approval.This latest move, then, is a particularly important next step towards liberalisation of cross-border investment in mainland securities, since foreign investors currently hold just two per cent of the CIBM, according a BNP Paribas Securities research note. These foreign holdings have mostly been in the form of central government bonds and policy bank bonds being held by foreign central banks, RMB clearing banks and other selected investors (mostly in Greater China and Singapore). "Now the opportunity to participate is open to a much larger pool of potential investors, on a much wider range of securities issued by thousands of Chinese companies and financial institutions, as well as government entities," the Hong and China based analysts at BNP Paribas Securities wrote in a report to institutional clients.The attractions for foreign investors of investing in the CIBM go beyond the sheer size of the market and its liquidity. The BNP Paribas report notes: "Yields are an obvious one, especially given the proliferation of negative interest rates in many markets, even for some corporate bonds and government securities of longer tenors. China's ten-year sovereign yield of three per cent compares to minus 0.15 per cent in Japan, the world's second biggest bond market, and 1.68 per cent in the US, the world's biggest. Similar spreads can be seen across the yield curve.The move has been rapid, and "inevitably some issues still need clarification, and there are some idiosyncrasies that foreign investors need to be aware of before entering the market," BNP said. For a start, investment in the CIBM must be pre-funded, not reliant on credit lines provided by brokers or agents to complete trades. Also, the settlement period is very short and often must be made on T+0 or T+1."This is of particular relevance to institutions in Europe or North America, given time differences, and puts the onus on them to ensure their processes are streamlined," wrote BNP."Another point that will need clarification is the applicability of tax rules for investors in the CIBM. For example, how withholding tax on coupon payments from corporate bonds will be collected is unclear."