First two bond exchange traded funds approved

China's financial regulator has approved the launch of the country's first two bond exchange traded funds.

Guotai Asset Management Co said on Tuesday that China Securities Regulatory Commission had approved an application to launch its bond ETF, that will track China Securities Index Co's SSE 5-Year China Treasury Note Index.

Bosera Asset Management (International) Co Ltd also announced the commission had approved its launch of a bond ETF tracking the SSE Corporate Bond 30 Index.

The launch of the bond ETFs is part of a program to diversify China's bond market, which also includes a plan for launching bond futures.

Analysts said the launch of bond ETFs will add liquidity to the investment market and may activate exchanges in inter-market bonds trading.

China has been encouraging the use of ETFs to increase renminbi investment products and provide more financial tools for domestic investors.

Exchange-traded funds tracking H-shares were introduced in October 2012.