Lately, the Shanghai Stock Exchange ("SSE") and the China Securities Depository and Clearing Corporation Limited ("CSDC") have formulated and issued the Interim Measures for Pledge-style Bond Tripartite Repo Transactions and Settlement (the "Measures"); in the meantime, the SSE has also released the Business Guide to Pledge-style Bond Tripartite Repo Transactions. Both documents have taken effect from the issue date.
The Measures regulate the tripartite repo business from the perspective of investors' suitability, management of collaterals, arrangements for the settlement of transactions, and sustainability management. To be specific, the first is operating an entry administration by record-filing regime over tripartite repo business, and it is stipulated that strict limits are imposed on the entry of obverse repurchasing parties in the tripartite repo business, and a credit whitelist will be created to effectively control risks of participants. Second, in tripartite repo business, eight relatively standardized baskets of pledged bonds are set up according to such elements as the bond varieties and credit ratings, which are favorable to making the settlement of transactions more efficient. Third, third-party agencies will offer services to manage collaterals in a centralized manner, including selecting collaterals, and apply the mark to market system on a daily basis to the pledged bonds in their duration. Fourth, a mechanism is introduced to tripartite repo business to deal with the disposal of collaterals, in case of any defaults.