Lately, three departments, including the People's Bank of China ("PBC"), have jointly distributed the Circular on Launching the Over-the-counter Business for Local Government Bonds in the National Interbank Bond Market (the "Circular").
The Circular provides that, an institution engaged in the over-the-counter (OTC) business is allowed to conduct the OTC business for existing local bonds, and local bonds newly issued among targets including OTC business investors, provided that such OTC business is accepted by relevant bond issuers. Issuing local bonds at the counter of such an institution must comply with applicable provisions of the Ministry of Finance ("MOF"). Meanwhile, the Circular expressly states that, an institution engaged in the OTC business shall conduct the OTC business for a local bond in priority among investors at the place where the issuer of this local bond is situated; also, in conducting the OTC business for a type of local bond that is issued via the private placement, such institution may trade this type of local bond with targeted bond investors in the national interbank bond market. Furthermore, the Circular states that, a local bond issuer shall work effectively on information disclosure in accordance with the Administrative Measures for Over-the-Counter Business in the National Interbank Bond Market and applicable provisions in regard to the administration of the issuance of local bonds.