In order to improve the mechanism of bond collateral disposal, protect the legitimate rights and interests of investors, and promote the healthy development of the exchange-traded bond market, the Shanghai Stock Exchange (SSE) recently issued and implemented the "Guidelines of the Shanghai Stock Exchange for the Services of the Bond Collateral Disposal Platform" (the "Guidelines" for short). The move is another important measure for the SSE to improve the relevant systems of the bond repo market.
In recent years, the exchange-traded bond repo market has developed rapidly. With the repo businesses such as bond collateral repo, agreed repo and tri-party repo launched successively, a multi-level repo business system has been formed, the size of the collateral in the repo transaction category has grown significantly, the market participants have been increasingly expanded, and the overall operation of the repo businesses has been stable, safe and controllable. In such a context, looking forward and taking precautions, the SSE has researched and established a centralized platform for bond collateral disposal, so as to provide collateral disposal services for the market and further improve the institutional mechanism for the exchange-traded repo market. As a supporting arrangement for the bond repo business, the collateral disposal platform is of great significance to the long-term healthy development of the bond market. First of all, the establishment of the disposal platform will effectively improve the liquidity of the collateral, meet the need of market institutions to quickly dispose of collateral, and protect the legitimate rights and interests of the investors. Secondly, the disposal platform can more effectively discover the fair value of collateral and improve the disposal efficiency by bringing more institutional investors into participation. Thirdly, the disposal of collateral on the platform can reduce the impact on the prices in the cash bond market and ensure the smooth operation of the cash bond market. In general, the establishment of the disposal platform provides a new way to quickly dispose of collateral to realize the right of pledge, which is of great significance for safeguarding the legitimate rights and interests of all parties concerned and promoting the healthy development of the bond market.
The Guidelines stipulates the business norms of the bond collateral disposal platform in the scope of application, the underlying assets of the disposal, the participating entities, the application and announcement for the disposal service, the disposal arrangements and other aspects. The items for disposal include all kinds of collateral products entrusted at the designated registration and clearing institution with the guarantee handled by rule, such as treasury bonds, local government bonds, financial bonds, corporate bonds, enterprise bonds, convertible bonds, asset-backed securities and other bonds approved by the SSE. The financial institutions that meet the related conditions may apply for joining the qualified quotation groups and participate in the quotation on the disposal platform. The SSE has previously solicited opinions and suggestions on the Guidelines from a number of market institutions, and has held meetings on the comments of the market institutions. The SSE has analyzed every opinion and suggestion to fully understand the market responses. In addition, the SSE has also consulted the market institutions about their intentions to participate in the qualified quotation group, and the feedback of the market institutions was positive on the whole, which is conducive to ensuring that the disposal of bond collaterals could achieve the expected results.
In the near future, the SSE will make efforts in training and promotion for the bond collateral disposal platform through special training sessions, meetings on communication with key institutions and other means, set up the qualified quotation groups. Based on the trial operation of collateral disposal and the opinions of the market institutions, the SSE will continue to make improvements, optimize the mechanism of the bond collateral disposal, increase the disposal efficiency, fully protect the legitimate rights and interests of all the parties in repo, and further promote the long-term healthy operation of the exchange-traded bond market.
