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For higher quality and efficiency of information disclosure for corporate bonds and assets-backed securities, the Shanghai Stock Exchange (SSE) has issued the SSE Guidelines for Application of Self-Regulatory Rules for Bonds No. 2 – Information Disclosure Direct Channel for Corporate Bonds and Asset-backed Securities (the “Direct Channel Guidelines” for short) and the SSE Business Guide to Bond Duration No. 2– Information Disclosure Direct Channel for Corporate Bonds and Asset-backed Securities (the “Direct Channel Guide” for short). The SSE’s move marks its official launch of the information disclosure direct channel system for the bond market. As an important measure taken by the SSE to actively adapt to the development needs of the bond market, implement the spirit of the reform of the registration-based issuance system, the SSE aims to tighten the responsibility of the information disclosing entities, improve the market-based restrictions on information disclosure, and accelerate the realization of the transformation of self-regulation.
The information disclosure direct channel refers to the information disclosure method in which market entities register and upload the information disclosure documents with the SSE and directly disclose information on the SSE official website. With the gradual improvement in the information disclosure system for the bond market in recent years, the information disclosure getting more and more standardized, and the SSE’s increasingly mature technology, adequate support is provided for the implementation of the information disclosure direct channel in the bond market in terms of system, market and technology. In the earlier stage, the SSE, in accordance with the principles of steady progress and controllable risks, successively piloted the direct channel system in the disclosure of periodic reports and rating reports for corporate bonds, upgrading the timeliness and convenience of information disclosure. In order to further urge market entities to fulfill their responsibilities and improve the overall operating efficiency of the bond market, on the basis of summarizing the practical experience of regulation and conducting in-depth analysis of actual conditions, the SSE has launched the full system of information disclosure direct channel for the bond market. All this aims to speed up the transformation from ex ante format review of information disclosure to ex post regulation on violations, further improving the professionalism and pertinence of regulatory work.
The implementation of the direct channel for information disclosure in the bond market is a major change in the mode of information disclosure and the approach to self-regulation. The institutional arrangement has the following features:
First, the coverage on business areas is improved, and the tools are more user-friendly. The Direct Channel Guidelines clarify the basic arrangements for the direct channel for corporate bonds and assets-backed securities, stipulate the scope of application of the direct channel and the principles for business handling, and provide detailed directions for the scope of the announcements and paths of disclosure on the direct channel through the announcement category index; in addition, the Direct Channel Guide elaborates on the handling process, specific operations and matters worth attention for the direct channel business in an explicit form with both pictures and texts, making it easier and more friendly for market entities to use.
Second, accountability is clarified, and ex post regulation is strengthened. The direct channel system has strengthened the primary accountability of the information disclosure obligors, clarified that ex post format review of the announcements on the direct channel will be conducted, and improved the regulatory requirements for handling the information disclosure business such as timeliness, accuracy and completeness. The Direct Channel Guidelines stipulate that the scope of application of the direct channel can be adjusted on the basis of the compliance and quality of information disclosure of the issuers or the assets-backed special programs. By strengthening the evaluation and self-regulation of information disclosure, the market entities are guided to be diligent and fulfill their responsibilities.
Third, targeted regulation is implemented to prevent business risks. The Direct Channel Guidelines focus on protecting investors’ interests and maintaining the order of the bond market, and clarify the focus of regulation by implementing targeted regulation on disclosure entities and announcements. For the bond issuers and the assets-backed special programs that are included in the risk management program, the announcements that trigger business operations, and the announcements with a significant impact on the interests of investors, regulation will start from the earlier stage, as the ex ante format review will be maintained and disclosure through the direct channel will not be applicable temporarily.
Fourth, the business procedures are optimized and disclosure is simplified. If the issuer issues multiple bonds, or multiple asset-backed securities are included in one asset-backed special plan, it is allowed to disclose announcements for multiple securities together. If the direct channel announcements to be disclosed by a market entity involve multiple categories, it is allowed to create a combined information disclosure application procedure. Labels are used to distinguish different categories of announcements, thus greatly reducing the processing cost of information disclosure and effectively bringing convenience to the market entities.
Going forward, the SSE will, with renewed efforts to improve services and strengthen regulation, continue to promote the high-quality development of the bond market. First, the SSE will organize special training for market participants to improve understanding of the direct channel business, give full play to the motivation of market participants, and guide the entities responsible for information disclosure to operate in a compliant manner; second, the SSE will continue to strengthen regulation on information disclosure, and will impose heavier penalties in ex post regulation on the abuse of the direct channel or major faults and omissions in disclosure; third, the SSE will continue to optimize the direct channel system for the bond market, gradually expand its scope of use, and persistently improve the quality of information disclosure in the bond market to protect the legitimate rights and interests of investors.
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