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Implementation Rules for Bond Trading on Shenzhen Stock Exchange (hereinafter is referred as Implementation Rules) have recently been promulgated, marking a historic milestone in the development of Shenzhen bond market. The Implementation Rules are an important measure aimed at enhancing efficiency and laying a solid foundation for the development in the bond market.
According to a spokesperson from Shenzhen Stock Exchange, Shenzhen bond market has been witnessing continuous growth thanks to increased diversity of bond products and market participants. By the end of September 2012, the number of listed bonds on Shenzhen Stock Exchange reached 350, with a total of 151.115 billion Yuan under custody. Among them, 56 corporate bonds were listed this year, raising 52.33 billion Yuan. The number of listed corporate bonds reached 111.
In order to improve the fundamental system and enhance market efficiency, Shenzhen Stock Exchange intensified effort in developing the bond trading system and a convenient efficient trading platform for diversified bond products. For example, adjustment to bond settlement cycle went online in September this year, recording marked improvement efficiency of corporate bonds settlement.
Implementation Rules on Bond Trading signifies the official kickoff of a number of key projects in improving Bond Trading System. First, the efficiency of bond pledged repo is being enhanced. Bonds can be collateralized for repos trade on the same day when the bonds are purchased. .Bonds can be declared as collaterals can be released from collateral on the same day. Bonds released from collateral can be re-collateralized on the same day. Second, bond repos trades are standardized and collaterals are diversified. Convertible bonds have become available as collaterals for bond repos trade. Third, the bond repurchase business process is being improved with bond collaterals and repos accounted for in the corresponding securities accounts. It is worth mentioning that the Implementation Rules cover declaration, transactions and information disclosure for cash bonds, repos and block trades of listed bonds, enabling investors to systematically and comprehensively understand the trading rules on the listed bonds on Shenzhen market.
The promulgation and implementation of Implementation Rules facilitates and promotes investors’ participation in the bond trading in the exchange, further galvanizing Shenzhen bond market. Implementation Rules also pave the way for future innovation in bond products in Shenzhen. According to a spokesperson from Shenzhen Stock Exchange, the exchange will further push forward innovation in bond products, speed up the research, promotion and release of index-based bond products in Shenzhen and enrich the diversity and means of bond trading. Shenzhen Stock Exchange will organize the training and publicity seminars to explain the rules and processes in detail and facilitate understanding by practitioners of securities companies. Member securities firms and investors are expected to heed these activities.
