To promote the development of the exchange-traded bond market and strengthen the risk management of collateralized repo of bonds, in accordance with the “Measures for Management of Issuance and Trading of Corporate Bonds” issued by the China Securities Regulatory Commission (CSRC) and other relevant rules, China Securities Depository and Clearing Co., Ltd. (CSDC), the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) have jointly formulated the “CSDC, SSE and SZSE Guidance for Risk Control on Trading and Settlement in Collateralized Repo of Bonds” (the “Guidance” for short). The “Guidance” is hereby released and the relevant issues are announced as follows:
1. As from today, the institutions directly holding or renting the Participant Business Units (PBUs) of the stock exchanges, the clearing participants of CSDC and other relevant participating institutions shall, in accordance with the relevant requirements of the “Guidance”, complete their business and technical preparations as soon as possible.
2. According to Article 7 of the “Guidance”, individual investors shall settle all their financing repos in 12 months as from today, and shall not increase the undue balance of the financing repos during the period.
3. The repo financing entities unqualified for the requirements of Article 13 of the Guidance shall make adjustment until meeting the relevant requirements of the Guidance in 6 months as from today. Before meeting the requirements, the repo financing entities shall not increase the undue balance of the financing repos.
4. For the pledged bonds that have been submitted for storage but do not meet the requirements of Article 14 of the “Guidance”, the relevant repo financing entities shall adjust the in-storage concentration rate below 15% and 10% in 8 months and 12 months as from today, respectively. Before meeting the requirements, the repo financing entities shall not increase the storage of the bond.
5. For violations of the rules in the “Guidance” other than those stipulated in the second, third and fourth items in this notice, the participating institutions and the repo financing entities shall make adjustment to meet the requirements within 3 months as from today.
6. As from today, the original “SSE Guidance for Risk Control of Collateralized Repo of Bonds” shall be abolished simultaneously.
The notice is hereby released.
