Circular of the People's Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission on Regulating the Bond Transaction Business of Players in the Bond Market

Circular of the People's Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission on Regulating the Bond Transaction Business of Players in the Bond Market

Yin Fa [2017] No.302

January 4, 2018

In order to further regulate the bond transaction business of players in the bond market and promote the healthy and steady development of the bond market, the relevant matters are hereby notified as follows in accordance with the Measures for the Administration of Bond Transactions in the National Inter-Bank Bond Market (Order of the People's Bank of China [2000] No.2), the Administrative Measures for the Registration, Custody and Settlement of Bonds in Inter-bank Bond Market (Order of the People's Bank of China [2009] No.1), the Administrative Measures for the Issuance and Trading of Corporate Bonds (Order of the China Securities Regulatory Commission No.113) and other relevant provisions:

I. For the purpose of the Circular, players in the bond market (hereinafter referred to as "Players") include financial institutions meeting the relevant provisions on access to the bond market and qualified domestic institutional investors of non-legal-person products and so on, and assets managers and custodians of non-legal-person products.
For the purpose of the Circular, bond transactions include bond transaction in cash, bond repurchase, forward bond transactions, bond lending, and other eligible bond transaction business.

II. A Player shall strengthen internal control and risk management and improve the compliance system for bond transactions in accordance with the relevant provisions of the People's Bank of China, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission (hereinafter referred to as the "financial regulatory authorities").
1. A Player shall establish an internal control system that penetrates all links and covers all business according to the nature, scale and complexity of the bond transaction business that it is engaged in, and prudently set such indices as the scale, credit granting, leverage ratio, price deviation through information technology means to keep a record of the whole process of the bond transaction business.
2. A Player shall separate each of its front office business such as proprietary trading, asset management and investment consulting, establish effective firewalls in respect of assets, personnel, systems and institutions, etc., and shall not carry out business by such contracting methods as personnel affiliation and all-round business contracting or otherwise relax management or apply excessive incentives.
3.
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