To implement relevant arrangements for the registration-based IPO system of corporate bonds laid out in the Securities Law and the Administration Measures for the Offering and Trading of Corporate Bonds, and further promote the healthy development of the exchange-traded corporate bond market under the registration-based IPO system, SZSE has recently drafted the Rules for the Review of Issuance and Listing of Corporate Bonds and revised the Rules for the Listing of Corporate Bonds, the Rules for the Transfer of Private Placement Corporate Bonds and the Administration Measures for Bond Market Investor Suitability. SZSE is currently seeking public opinions till 3 June 2021.
In recent years, SZSE has earnestly practiced the principles of “system building, non-intervention, and zero tolerance”, followed China Securities Regulatory Commission’s urges to revere the market, revere the rule of law, hold high professionalism, stay alert to risks, and obtain support from various parties, and adhered to the market- and law-based reform direction. Based on regulatory practices of the bond market, SZSE has developed a system of bond rules that is scientific, complete, transparent, efficient and easy to implement. With a focus on the steady operation of the registration-based IPO system of corporate bonds, SZSE has given better play to the role of the exchange bond market. In the drafting and revision of the rules, SZSE has centered on the following content:
First, refining basic regulations and building a simple and clear system of rules. SZSE has defined the boundary of business rules, stripping relevant regulations on the review of public offering corporate bonds from the Rules for the Listing of Corporate Bonds and formulating the separate Rules for the Review of Issuance and Listing of Corporate Bonds. It was a step to regulate matters relating to the review of public offering corporate bonds under the registration-based IPO system in a comprehensive way. The effort aims to refine basic regulations and build an integrated, unified system of rules that takes review rules, listing rules and transfer rules as its core; takes guidelines for review business and relevant guidelines for duration information disclosure and risk management as its trunk; and takes business handling guides as its supplement. Such system covers the whole regulatory chain including ex ante, in-process and ex post regulation.
Second, aligning with upper rules and ensuring formulation of suitable supporting regulations for the new Securities Law. SZSE has made public review standards, clearly laid out the conditions that applicants for the issuance and listing shall meet and information disclosure requirements. We defined specified matters of focus in review as well as material requirements, time limit for handling, etc. for each business node. We listed the situations where a corporate bond will be delisted (transferred) and that mainly include that the bond is completely repaid and that all bond holders approve and the issuer applies on its own initiative to cancel the listing of the bond. We strengthened the duration information disclosure requirements, adding credit enhancement entities as information disclosure obligors and refining the requirements on disclosure of important matters and annual reports by issuers.
Third, implementing the requirement of furthering reforms to streamline administration and delegate power, improve regulation, and upgrade services and continuing to improve the capability of bringing tangible benefits to market entities. Based on the “one-stop” (issuance, registration and listing) service practices, SZSE has significantly simplified the requirements on application materials for listing and transfer. Applicants no longer need to submit documents such as application form that have already been provided during the review or issuance stage, but only need to provide registration competition certificate, etc. We canceled mandatory rating arrangements, deleted rating indicators, and introduced relevant situations that may affect investor protection as the adjustment criteria of investor suitability during duration.
Fourth, defining intermediaries’ responsibilities and urging market entities to fulfill their duties. According to the principle that “regulation starts when application is accepted”, SZSE has made it clear that beginning on the day when application documents are accepted, the issuer and its related parties, the lead underwriter, the securities service agency and other relevant parties will undertake corresponding legal responsibility. We emphasized professional institutions’ special attention obligation, and stated that securities service agencies have the obligation of ensuring authenticity about the written opinions they issue. We also refined the types and triggers of regulatory measures and disciplinary punishments, as well as the liabilities of relevant parties.
Next, SZSE will continue to apply the working philosophy of being open-minded, transparent, disinterested, and impartial to advance the release of rules, bond review, risk control, etc. in a steady and orderly manner. With an open mind, we will carefully study and absorb reasonable suggestions from market participants and work faster to complete the preparation, revision and release of relevant rules. With transparent standards, we will adhere to the idea of registration-based IPO system with information disclosure at its core, thus strengthening the predictability of review progress and results. With an honest style of work, we will enhance oversight and restriction of exercise of power and ensure clean, honest and self-disciplined regulation. With impartial disciplines, we will strictly implement rules and regulations and increase the intensity of accountability for illegal behaviors, to maintain a normative, orderly bond market environment and further improve the capability of the exchange bond market in serving the real economy.
