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Shenzhen Stock Exchange Amends The Implementation Rules For Bond Transactions To Extend The Time For Bond Pledged Repos

Date 22/01/2019

On January 17, 2019, Shenzhen Stock Exchange (SZSE) issued the revised Implementation Rules for Bond Transactions (hereinafter referred to as the Rules), which extends the cutoff time for bond pledged repo transactions, bond pledge acceptance and request for pledge removal to 15: 30 on each trading day. The Rules will come into effect on January 21, 2019.

Related officials from SZSE said that, based on the existing trading and settlement mechanisms, extending the duration of bond pledged repo transactions will provide more opportunities for market participants to raise and match funds, arouse greater enthusiasm of investors in participating in the repo market, and stabilize the capital supply of the bond repo market. For the principal buyback party, extending the entry and exit time of pledged bonds to 15: 30 can help improve the bond use efficiency. For individual investors, extended transaction time allows them to participate in overnight reverse repo after auction trades of existing securities are closed without affecting their participation in transactions of existing securities such as shares in the next trading day.

In recent years, under the guidance of CSRC, SZSE has taken a series of measures in coordination with all parties, including issuing risk control guidelines for repo business, establishing a repo data reporting system, issuing weighted average interest rates for repo transactions in real time, and modifying repo interest calculation methods. These measures promote the stable operation of SZSE bond pledged repo business. Next, SZSE will strengthen market training and investor education to further enhance the understanding and participation of market participants in the bond repo market, and urge securities companies and other market participants to get ready for extended bond pledged repo trading time in both business and technology to ensure smooth and orderly operation of the bond repo business.