The China Securities Depository and Clearing Corporation Limited ("CSDC") has recently issued the Implementing Rules for the Business of Disposing of Securities to be Traded (Applicable to Securities Traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange) (Draft for Comment) (the "Draft for Comment") and the Implementing Rules for the Business of Disposing of Securities to be Traded (Applicable to Securities Traded and Transferred on the National Equities Exchange and Quotations) (Draft for Comment) to seek comments from all market players by December 20, 2017.
The Draft for Comment stipulates that the CSDC may dispose of the securities in question either by entrusting a party for this purpose on the floor of an exchange or inquiring about prices in the over-the-counter ("OTC") market, and may redeem the fund units as the case may be. Further, the Draft for Comment expressly states that for stocks and exchange trading, they are usually disposed of by an entrusted party on the floor of an exchange; and the number of bonds disposed of in this way shall be capped at five percent of the total amount entrusted on the exchange. Furthermore, the Draft for Comment sets forth the criteria for selecting a securities company to be entrusted under the exchange-based method and a targeted bidder under the OTC method.