To regulate the registration, custody and clearing of bonds in the inter-bank bond market, protect the legitimate rights and interests of investors and promote the healthy development of the bond market, the People's Bank of China formulated the Administrative Measures for the Registration, Custody and Clearing of Bonds in the Inter-bank Bond Market, which were adopted at the 37th governor's executive meeting on December 16, 2008. They are hereby promulgated and shall come into force on May 4, 2008.
Zhou Xiaochuan, Governor of the People’s Bank of China
March 26, 2009
Annex:
Administrative Measures for the Registration, Custody and Clearing of Bonds in the Inter-bank Bond Market
Chapter I General Provisions
Article 1 To regulate the registration, custody and clearing of bonds in the inter-bank bond market, protect the legitimate rights and interests of investors, maintain the normal order of the registration, custody and clearing of bonds and promote the healthy development of the bond market, these Measures are formulated according to the Law of the People's Republic of China on the People's Bank of China and other relevant laws and regulations.
Article 2 These Measures shall apply to the registration, custody and clearing of negotiable securities with regular earnings (hereinafter referred to as bonds) in the inter-bank bond market.
The registration, custody and clearing of book-entry treasury bonds for counter trading of commercial banks shall be governed by the Administrative Measures for the Counter Trading of Book-entry Treasury Bonds in Commercial Banks.
Article 3 The registration, custody and clearing of bonds shall follow the principles of security and high efficiency and adopt the nationwide unified operation and management modes.
Article 4 The People's Bank of China shall supervise and administer the bond registration, custody and clearing institution and the bond registration, custody and clearing business in the inter-bank bond market.
Chapter II Bond Registration, Custody and Clearing Institution
Article 5 For the purpose of these Measures, the term “bond registration, custody and clearing institution” refers to a legal person that specially handles the bond registration, custody and clearing business in the inter-bank bond market.
China Government Securities Depository Trust & Clearing Co., Ltd (CDC) is the bond registration, custody and clearing institution designated by the People's Bank of China.
Article 6 The bond registration, custody and clearing institution shall bear the functions of the central registration, primary custody and clearing of bonds, while the counter trading administering banks approved by the People's Bank of China shall bear the secondary custody functions of the book-entry treasury bonds for counter trading of commercial banks.
Article 7 The bond registration, custody and clearing institution shall perform the following functions in the bond registration, custody and clearing business:
1. setting up and managing bond accounts;
2. conducting registration of bonds;
3. conducting custody of bonds;
4. conducting clearing of bonds;
5. paying the principal and interest of redeemed bonds and relevant income from bonds upon authorization;
6. taking master custody of inter-market traded negotiable bonds;
7. providing management services for bonds and other pledges;
8. exercising the rights over bonds against bond issuers on behalf of bondholders;
9. providing information, inquiry, consultation and training services related to the registration, custody and clearing of bonds;
10. supervising the secondary custody business of the counter trading administering banks; and
11. other functions as specified by the People's Bank of China.
Article 8 The bond registration, custody and clearing institution shall take the following measures to guarantee normal business operations:
1. equipping itself with special-purpose systems and devices for the registration, custody and clearing of bonds, and improving the technical means to protect data security;
2. setting up a system failure emergency handling mechanism and a backup mechanism for disaster recovery;
3. improving the corporate governance structure, setting up and improving the internal control mechanism and the risk management rules, and regularly making internal audit on and inspecting the bond registration, custody and clearing business; and
4. working out business rules and operating instructions for the registration, custody and clearing of bonds and strengthening the management of key posts.
Article 9 The bond registration, custody and clearing institution shall report the following issues to the People's Bank of China for approval:
1. the making or change of bylaws, or such important issues as merger, acquisition, reorganization and split;
2. the making or change of the internal control rules, risk management rules, business rules or emergency plans;
3. the launching of new business, or the change in the operation mode of the registration, custody and clearing business;
4. the cooperation with domestic and overseas intermediary institution of other markets in terms of the bond registration, custody and clearing business; and
5. other issues as specified by the People's Bank of China.
Article 10 The bond registration, custody and clearing institution shall report the following issues to the People's Bank of China for archival purposes:
1. the making and change of any mid- and long-term development planning;
2. any change in the senior management; and
3. other issues as specified by the People's Bank of China.
Article 11 The bond registration, custody and clearing institution shall properly keep the original vouchers, accounting data and other relevant documents and materials about the registration, custody and clearing of bonds for at least 20 years upon the maturity of bonds.
Article 12 The bond registration, custody and clearing institution can sort out and regularly publish the relevant information about the registration, custody and clearing of bonds according to the business development needs. The bond registration, custody and clearing institution shall observe the relevant provisions of the People's Bank of China when providing the above-mentioned information to any other organization or individual.
Article 13 The bond registration, custody and clearing institution shall have the obligation to bondholders of keeping confidential the data and materials about the registration, custody and clearing of their bonds, except the following circumstances:
1. a bondholder inquires about the accounting data of the bonds held by the bondholder;
2. a party entrusted by a bondholder inquires about the accounting data of the bonds held by the bondholder with the written letter of attorney issued by the bondholder;
3. a people's court, people's procuratorate or public security organ makes inquires or takes evidence according to the statutory procedure and requirements; or
4. other circumstances prescribed by law.
The bond registration, custody and clearing institution shall provide convenience for bondholders to get the records of their bond accounts in time.
Article 14 The bond registration, custody and clearing institution shall make public the charging items and rates related to the bond registration, custody and clearing business.
When making or adjusting the charging items or rates, the bond registration, custody and clearing institution shall consult with the National Association of Financial Market Institutional Investors (NAFMII), bond issuers and bondholders, and report the consultation situations to the People's Bank of China.
Article 15 The bond registration, custody and clearing institution shall conclude a corresponding service agreement with each bond issuer and bondholder to specify the rights and obligations of both parties.
The bond registration, custody and clearing institution shall, on the basis of sufficiently consulting with the NAFMII, bond issuers and bondholders, make the text of the relevant service agreements and report the consultation situations to the People's Bank of China.
Article 16 The bond registration, custody and clearing institution shall monitor the registration, custody and clearing activities of bonds on a daily basis. It shall, when finding out any abnormal circumstance, any big operational risk or technical risk or any gross violation, immediately report it to the People's Bank of China, handle the situation and send a copy of the report to the NAFMII.
The bond registration, custody and clearing institution and the National Inter-bank Funding Center shall cooperate with each other in establishing a first-line monitoring system for the bond market.
Article 17 The bond registration, custody and clearing institution shall, within the first five workdays of each month, file the data and statistical information about the issuance, registration, custody and clearing of bonds in the last month with the People's Bank of China and, within 20 workdays after the end of each year, file an annual work report on the bond registration, custody and clearing business of the year with the People's Bank of China.
The NAMFII, the bond registration, custody and clearing institution and the National Inter-bank Funding Center shall set up an information and data exchange mechanism according to the relevant provisions of the People's Bank of China.
Article 18 The bond registration, custody and clearing institution shall publish the statistical information about the bond registration, custody and clearing business in a timely manner according to the relevant provisions, but may not disclose any non-public information.
Chapter III Bond Accounts
Article 19 Bond accounts refer to the electronic book-keeping accounts opened at the bond registration, custody and clearing institution for recording the variety and quantity of the bonds held by bondholders as well as any changes thereof.
Article 20 Bondholders shall hold bonds through bond accounts. The amount of the bonds held by a bondholder shall be the balance of the bonds under custody as recorded in the bond account of the bondholder. Where any bondholder has any demurral against any information recorded in the bond account, the bond registration, custody and clearing institution shall recheck and reply in a timely manner. Where any data error resulting from the fault of the bond registration, custody and clearing institution causes losses to a bondholder, the bond registration, custody and clearing institution shall assume corresponding legal responsibility.
Article 21 The bond registration, custody and clearing institution shall work out the bond account management rules under the principle of classified setup and centralized management.
Article 22 To open a bond account, a bondholder shall submit an application to the bond registration, custody and clearing institution according to the provisions of the People's Bank of China and undertake the authenticity, accuracy and integrity of the materials submitted for opening the account.
Bond accounts shall be opened in real name, and may not be leased, lent or transferred.
Article 23 Bond accounts include proprietary accounts and agency master accounts.
Article 24 Unless it is otherwise provided by the People's Bank of China, one investor is allowed to open only one proprietary account.
An investor at the legal-person status shall open a proprietary account in the name of legal person; a commercial bank branch office may open a proprietary account in the name of the branch office upon the authorization of the legal person; and a securities investment fund or any other non-legal-person institutional investor may separately open a proprietary account according to the provisions of the People's Bank of China.
Article 25 Counter trading administering banks and the securities registration, custody and clearing institutions at other trading places may open agency master accounts at the bond registration, custody and clearing institution to record the balance of all bonds under their secondary custody.
The total amount of bonds held by secondary custody account holders as verified by a counter trading administering bank or a securities registration, custody and clearing institution at any other trading place shall be equal to the balance of bonds recorded in its agency master account, and the bonds in the master agency account shall be strictly separated from the bonds in its proprietary account.
Article 26 A bondholder may apply for writing off its account. Where a bondholder does so, the bond registration, custody and clearing institution may write off its account only after confirming that the account has no bonds under custody and does not fall under the circumstances of immature repurchase, unsettled creditor's right or debt, pledge or freezing.
Chapter IV Registration of Bonds
Article 27 Registration of bonds refers to the act of the bond registration, custody and clearing institution to confirm the fact that bondholders hold bonds by way of book-keeping.
Article 28 After the issuance of bonds ends, the bond issuer shall provide the bond registration, custody and clearing institution with the photocopies of the examination, approval and registration documents issued by the competent bodies and organizations, the relevant issuance documents and other relevant materials. The bond registration, custody and clearing institution shall make the registration of bonds based on the confirmation of the full receipt of funds raised for issuing bonds in a timely manner. Where any secondary custody account is concerned, the relevant counter trading administering bank or the securities registration, custody and clearing institution of another trading place shall make registration of bonds for the holder of the secondary custody account.
Article 29 During the period of continual existence of bonds, the derivative bonds which come into existence as promised by the bond issuer or requested by a bondholder shall be registered by the bond registration, custody and clearing institution based on the issuance documents and the entrustment of the bondholder.
Article 30 Where the balance of a bond account changes due to transaction settlement of bonds, non-trading assignment of bonds or exercise of option, the bond registration, custody and clearing institution shall register the change. Where any secondary custody account is concerned, the relevant counter trading administering bank or the securities registration, custody and clearing institution of another trading place shall make registration of change for the holder of the secondary custody account.
Where any bond issuer is changed due to split, merger or dissolution, the party succeeding to its debts shall submit the relevant evidentiary materials to the bond registration, custody and clearing institution which shall make registration of change in a timely manner.
Article 31 The bond registration, custody and clearing institution may provide bond pledge registration services for bondholders to freeze the concerned bonds or may freeze bonds according to law. Where any bonds are frozen, the bond registration, custody and clearing institution shall make a clear mark on the corresponding bond account to indicate that the rights over the bonds are restricted.
Article 32 Where any creditor's right or debt is terminated due to redemption of bonds when they become due, redemption of bonds ahead of schedule or exercise of option, the bond registration, custody and clearing institution shall deregister the bonds; where any secondary custody account is concerned, the relevant counter trading administering bank or the securities registration, custody and clearing institution of another trading place shall write off the balance of the bonds under custody in time.
For the redemption of frozen bonds when they become due, the bond registration, custody and clearing institution shall draw the principal and interest and, after the party concerned produces valid legal documents, handle the redemption formalities according to law.
Chapter V Custody of Bonds
Article 33 Custody of bonds refers to the act of the bond registration, custody and clearing institution to have custody of the bonds held by bondholders in a concentrated way and manage and maintain their rights and interests over the bonds.
Article 34 Bondholders shall authorize the bond registration, custody and clearing institution to have custody of their bonds.
A bond custody relationship shall be established after the bond registration, custody and clearing institution opens a bond account for the bondholder and terminated upon the writing-off of the bond account.
Article 35 The bond registration, custody and clearing institution shall take safe and effective measures for managing the bonds of bondholders under its custody so as to guarantee the authenticity, accuracy, integrity and safety of the information of the accounts under its custody. The bond registration, custody and clearing institution has no ownership of any nature over the bonds under its custody, and may not misappropriate any of them.
Where the bond registration, custody and clearing institution falls under bankruptcy, dissolution, split, merger or cancellation, bondholders' bonds and other assets under its custody shall not be used for assets liquidation.
Article 36 Bondholders who make inter-market transactions can transfer the custody of their inter-market traded negotiable bonds. The bond registration, custody and clearing institution shall provide custody transfer services for them in a timely manner.
Article 37 Where any bond issuer entrusts the distribution of the principal and interest of redeemed bonds or the relevant income from the bonds to the bond registration, custody and clearing institution, it shall pay the relevant fees to the bond registration, custody and clearing institution in time and in full amount. The bond registration, custody and clearing institution shall handle the entrusted issue in time after receiving the relevant fees. If the bond issuer fails to fulfill the above-mentioned payment obligation, the bond registration, custody and clearing institution has the right to postpone the handling of the entrusted issue, and, in this case, the bond issuer shall explain the relevant situations to the market.
Chapter VI Clearing of Bonds
Article 38 Clearing of bonds refers to the assignment of bonds conducted based on confirmed clearing instructions.
Article 39 Investors or their agents shall send clearing instructions according to the bond trading contracts, and their bond accounts shall have enough balance for clearing purposes.
Article 40 The bond registration, custody and clearing institution shall specify the forms and transmission ways of clearing instructions and take effective identification measures for such instructions.
The bond registration, custody and clearing institution shall handle the clearing of bonds for investors or their agents according to their valid clearing instructions in a timely manner. Clearing of bonds shall be irrevocable once it is done.
Article 41 A full amount mechanism and a net amount mechanism are available for the clearing of bonds in the inter-bank bond market. The provisions governing the net amount business shall be formulated by the People's Bank of China separately.
Article 42 The clearing of bonds and funds can be made in forms of delivery versus payment, payment upon sight of bonds, delivery of bonds upon sight of payment and free of payment.
In the form of delivery versus payment, bond delivery and payment are made simultaneously and conditioned by each other.
In the form of payment upon sight of bonds, payment by the assignee is conditioned by the full delivery of bonds by the assignor.
In the form of delivery of bonds upon sight of payment, bond delivery by the assignor is conditioned by full payment by the assignee.
In the form of free of payment, bond delivery and payment are independent from each other.
The risks involved in the clearing of bonds and funds shall be undertaken by both parties on their own.
Article 43 Funds or bonds that have entered the clearing procedure and are in the state of “to be paid or delivered” as well as the guarantees involved in the clearing can only be used for this clearing and may not be subject to compulsory execution.
Article 44 The bond registration, custody and clearing institution can provide bond borrowing and lending conveniences for investors so as to guarantee the smooth proceeding of the clearing of bonds. The relevant measures shall be formulated by the People's Bank of China separately.
Article 45 Bonds restricted from trading or circulation shall be assigned according to the relevant laws, regulations and the relevant provisions of the competent departments.
Article 46 In the case of the assignment of bonds for reasons other than trading such as deduction, succession, debt repayment and donation, the bond registration, custody and clearing institution shall ask the parties concerned to submit valid legal documents.
Chapter VII Legal Responsibility
Article 47 Where the bond registration, custody and clearing institution or any staff member thereof falls under any of the following circumstances, the People's Bank of China shall impose a punishment according to Article 46 of the Law of the People's Republic of China on the People's Bank of China:
1. neglecting duties and causing serious losses to any bond issuer or bondholder;
2. misappropriating any bondholder's bonds or fund under custody;
3. illegally altering the accounting data of any bond account;
4. divulging the account information of any bondholder; or
5. committing any other act in violation of these Measures.
Where any violation of these Measures constitutes a crime, the party committing the violation shall be subject to criminal responsibility.
Article 48 Where any bond issuer or bondholder violates these Measures, the People's Bank of China shall impose a punishment according to Article 46 of the Law of the People's Republic of China on the People's Bank of China and, where any crime is constituted, subject the bond issuer or bondholder to criminal responsibility.
Chapter VIII Supplementary Provisions
Article 49 The right to interpret these Measures shall remain with the People's Bank of China.
Article 50 These Measures shall come into force on May 4, 2009.
