Lately, the Shenzhen Stock Exchange ("SZSE") and the China Securities Depository and Clearing Corporation Limited ("CSDC") have jointly released the Interim Measures for the Pledge-style Bond Triparty Repo Transactions and Settlement (the "Measures") and the SZSE has also issued the Business Guide to the Pledge-style Bond Triparty Repo Transactions. All of these policy documents will enter into force as of July 30, 2018.
The Measures provide that the SZSE, as the marketplace where triparty repo transactions could be proposed, will verify the proposed transactions, formulate standards in respect of the management of collaterals, and exercise administration of participants in triparty repo transactions and baskets of pledged bonds. According to the Measures, triparty repo transactions cover a wider range of collaterals than pledge-style bond repos, implying that non-publicly offered securities and asset-backed securities may serve as the collaterals as well. Compared with the agreement-based pledge-style bond repos, triparty repos offer a series of services to manage collaterals, including the administration of baskets of pledged bonds, selection of pledged bonds, and the mark-to-market system on a daily basis, providing larger facilitation for transactions between parties involved in investment and for risk management before the maturity of pledged bonds. Furthermore, the Measures expressly state that the SZSE will accept proposed triparty repo transactions between 9:15 am and 11:30 am and between 13:00 and 15:30 on each trading day, and it may adjust these periods according to the needs.