Upon approval by the China Securities Regulatory Commission (CSRC), the Shanghai Stock Exchange (SSE) recently releases the “SSE Measures on Pilot Business of Securities Companies’ Short-term Corporate Bonds”, which marks the launch of the pilot work of securities companies’ short-term corporate bonds (the Short-term Bonds for short).
Securities companies have accelerated their business development and innovative progresses in recent years, with their financing needs continuously increased, while their leverage ratios are low and their financing channels are limited. Securities companies’ pilot issuance of short-term corporate bonds on the exchange’s bond market upon approval is regarded as a vigorous move of the relevant competent authority to implement requirements in the “Some Opinions of the State Council on Further Propelling Sound Growth of the Capital Market” and develop financing channels for securities and futures agencies. It is of great significance for boosting innovative growth of securities companies and development of the exchange’s bond market. First, the issuance of the Short-term Bonds contributes to further developing financing channels of securities companies and supporting innovative growth of the securities industry. As the Short-term Bonds provides a market-oriented short-term financing instrument (channel) for securities dealers, securities companies could, according to their business development, flexibly arrange for financing plans and supplement current capital sources. Besides, the issuance of the Short-term Bonds can not only meet short-term financing needs of securities companies, but also contribute to propelling the securities industry’s development and elevating the industry’s core competitiveness. Second, the issuance of the Short-term Bonds is conducive to diversifying bond products and meeting investors’ various needs. The Short-term Bonds, a supplement to the short-term products on the exchange’s bond market, contributes to optimizing the bond term structure of the exchange’s bond market, perfecting the market’s pricing mechanism, and fueling the corporate bond market’s growth. Meanwhile, the issuance of the Short-term Bonds provides an excellent short-term investment target for investors, especially the rapidly-developed investment products such as monetary funds, securities companies’ assets management products, and bank wealth management products, and contributes to meeting investors’ diversified needs of asset allocation.
An official of the SSE introduces that under the guidance of the CSRC, the SSE initially studied and formulated a pilot scheme for the Short-term Bonds with relevant departments, and solicited market opinions for many times. The systematical design of the Short-term Bonds embodies the principle of marketization, with the following characteristics. First, the pilot issuance of the Short-term Bonds will be carried out, and more issuers will be developed gradually later. The Short-term Bonds could be a short-term financing instrument for securities companies with standardized operation and good credit records. At the beginning, some securities companies with powerful comprehensive strength will be selected for the pilot issuance of the Short-term Bonds. Second, the balance management is adopted, with issuers independently controlling relevant issuance matters. The terms of the Short-term Bonds are less than one year. Securities dealers involved in the pilot issuance independently decide issuance time, term, and scale for each phase of bonds within lines approved by the CSRC. Securities companies who have got the qualification for securities underwriting business could handle issuance matters by themselves. Third, a filing system will be implemented, with issuance by installments acceptable. The Short-term Bonds, after being filed with the exchange, will be issued by installment in one year in light of its features such as short bond term and timeliness. The exchange will only check the completeness of the relevant filed documents and complete the filing work within 10 working days. Fourth, contractual freedom is stressed for flexibility. An issuer and investors independently negotiate the usage of the funds raised from the Short-term Bonds, as well as the bond rating, measures on credit enhancement, and other matters, which will be disclosed to the market as stipulated. Fifth, a qualified investors system will be implemented. Financial institutions and wealth management products issued by them, QFIIs and RQFIIs, and other eligible institutional investors can invest in the Short-term Bonds. After the Short-term Bonds filed with the exchange are issued, they will be transferred among eligible investors through the exchange’s technological system.
According to an SSE official, apart from providing services of filing, transfer and information disclosure for the Short-term Bonds, the SSE will take the following measures to boost the market growth. First, one-stop service will be provided. The SSE will provide one-stop service for registration and listing of various bonds including the Short-term Bonds to elevate the efficiency of registration and listing. The SSE bond business department will handle application documents of registration and listing, while the SSE and Shanghai Branch of China Securities Depository & Clearing Corp., Ltd. will complete the work of bond registration and listing within 5 working days. Second, agreed repo of bonds will be opened as soon as possible. The SSE is sparing no efforts to open the business of collateralized agreed repo of bonds and provide a collateralized repo trading mechanism characterized by one-to-one negotiation for all kinds of bonds, which will contribute to lowering issuance costs of the Short-term Bonds and enhancing liquidity of the secondary market. Currently, relevant systematical development and testing work have been finished, and the business will be opened as soon as possible in the near future. Third, issuance service will be provided. The SSE has a mature bond issuance system boasting an array of functions of tendering, distribution, information disclosure and others, and it will support the Short-term Bonds’ issuance to eligible investors according to market demands.