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In order to further focus on the positioning of stock pledged repo transactions in serving the real economy, control business risks and regulate the business operation, Shenzhen Stock Exchange (‘SZSE’) and China Securities Depository and Clearing Company Limited (‘CSDCC’) jointly promulgated the Measures for the Administration of Stock Pledged Repo Transactions and Depository and Clearing Business (Exposure Draft in 2017) under the approval by China Securities Regulatory Commission (‘CSRC’), and solicited opinions from the public.
According to the introduction of relevant official of SZSE, the amendments mainly include the following three aspects: Firstly, the positioning of serving the real economy is further focused. A fund acceptor shall not be a financial institution or its issued products, the fund shall be used for the production and operation of the real economy and managed via a special account, and the first transaction amount of the fund acceptor shall not be less than CNY5 million, and each subsequent transaction amount shall not be less than CNY500,000, and fund or bond is no longer to be recognized as initial pledge object. Secondly, risk management is further reinforced. The upper limit for stock pledge ratio shall not exceed 60%, the pledge ratio of single A-share accepted by a single securities company and a single capital management product as the fund provider shall not exceed 30% or 15% respectively, and the total pledge ratio of a single A-share shall not exceed 50%. Thirdly, business operation is further standardized. The business qualifications of securities companies are explicitly regulated, and securities companies are required to establish the mechanism on continuous management of credit risk of fund acceptors and tracked management of purpose of fund.
It should be specially noted that the above amendments are only applicable to new contracts, and the old contracts can be implemented or extended according to original regulations.
The official said that the amendments aim to implement the spirit of The National Conference on Financial Work and the requirements for the symposium on the interim supervision work of National Securities and Futures Supervision System, and do well the work of the three tasks of serving the real economy by capital market, controlling risks and deepening reformation. The deadline for the solicitation is September 22, 2017, SZSE and CSDCC will listen to the opinions of all parties and perfect the rules, and formally promulgated the rules after gaining the approval from CSRC.
