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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II ISSUANCE CHAPTER III TRADING, CUSTODY, SETTLEMENT AND REDEMPTION CHAPTER IV INFORMATION DISCLOSURE CHAPTER V SUPERVISION AND ADMINISTRATION CHAPTER VI SUPPLEMENTARY PROVISIONS CHAPTER I GENERAL PROVISIONS Article 1. The present Measures are formulated according to the Law of the People's Republic of China on the People's Bank of China with a view to promoting the further development of the money market, expanding the financing channels of securities companies, regulating the issuance and trading of short-term financing bonds of securities companies and protecting the legitimate rights and interests of the investors of short-term financing bonds. Article 2. The "short-term financing bonds of securities companies"(hereinafter referred to "short-term financing bonds") referred to in the present Measures are the financial bonds issued by securities companies for the purpose of short-term financing in the inter-bank bond market and for which both parties agree to repay both the principle and corresponding interests within a time limit. Article 3. The issuance and trading of short-term financing bonds of a securities company shall be subject to supervision and regulation by the People's Bank of China. Article 4. The People's Bank of China shall authorize the National Inter-bank Funding Center (hereinafter referred to NIFC) to publicize the supervisory opinions of China Securities Regulatory Commission (hereinafter referred to the CSRC) of whether or not an issuer of short-term financing bonds meets the basic conditions for issuing short-term financing bonds through the electronic information system of the NIFC. Article 5. The short-term financing bonds of a securities company shall be issued and traded only in the inter-bank bond market. Article 6. The issuance and trading of short-term financing bonds of a securities company shall follow the principles of fairness, good faith and self-discipline. Any investor of short-term financing bonds shall meet the requirements of prudent supervision of its own supervisory department and possess the capability of identifying, judging and assuming risks. The risks of short-term financing bonds shall be assumed by the investor itself. Article 7. Any securities company issuing short-term financing bonds shall repay the principal and interests on schedule. Article 8. Any securities company issuing short-term financing bonds shall truly, precisely, completely and timely disclose the information pursuant to the prescriptions of the present Measures. CHAPTER II ISSUANCE Article 9. Any securities company applying for issuing short-term financing bonds shall meet the following fundamental conditions and obtain approval from the CSRC: (1) Having acquired the membership of the National Inter-bank Funding Center for more than one year; (2) The issuer has, according to unified requirements of the norms, disclosed in detail its accounting information in the National Inter-bank Funding Center for more than one year, and there is no record of violation of information disclosure in the recent year; (3) The storage and management of transaction settlement funds of customers shall tally with the prescriptions of the CSRC, and the transaction settlement funds of customers have not been misappropriated during the recent year; (4) It should have a sound system of internal control; the entrusted businesses and the self-management businesses thereof shall be under strictly separate administration; there is a middle office to supervise and control the operational risks over front and back offices, and it has no significant violation of laws and regulations during the last two years; (5) The method of market value shall be adopted to evaluate the assets and debts, and a reasonable method shall be used to evaluate the risks of stocks; and (6) other conditions prescribed by the People's Bank of China or the CSRC. Article 10. A securities company with the competency to issue short-term financing bonds approved by the CSRC shall submit the following materials to the People's Bank of China for archival filing if it wishes to issue short-term financing bonds in an inter-bank bond market: (1) a photocopy of approval documents of obtaining membership of the National Inter-bank Funding Market; (2) a photocopy of the announcement of relevant information disclosure published by the NIFC; (3) a photocopy of confirmation documents of the CSRC of the competency to issue short-term financing bonds; and (4) other documents required to be submitted by the People's Bank of China. The People's Bank of China shall, within 10 working days of accepting the required materials for archival filing, confirm the receipt of such materials in the form of a written archival filing notice and set the upper limit of short-term financing bonds issued by a securities company. Article 11. A securities company that wishes to issue short-term financing bonds shall appoint an appraisal institution of capital and credit to assess its capital and credit. Article 12. A securities company that issues short-term financing bonds shall, according to the related prescriptions, formulate relevant business rules, and establish and improve a corresponding system of risk management and internal control. Article 13. A securities company shall adopt the management system of outstanding surpluses in the issuance of short-term financing bonds, and the outstanding surplus of short-term financing bonds to be repaid shall not exceed 60 per cent of its net capital. Within such limit, the securities company shall independently fix on the size of each issuance of short-term financing bonds. The People's Bank of China shall adjust the upper limit of an issuer's outstanding surplus of short-term financing bonds on the basis of the information concerning the securities company's net capital provided by the CSRC once every 6 months, and announce the upper limit of its outstanding surplus in the national inter-bank bond market. The People's Bank of China shall be entitled to adjusting the upper limit of ratio between the securities company's outstanding surplus of short-term financing bonds and its net capital on the basis of market performance and the issuer's situation. Article 14. The maximum maturity of a short-term financing bond shall be 91 days. A securities company that issues short-term financing bonds may independently determine the term of its short-term financing bonds within the said maximum maturity. The People's Bank of China shall be entitled to adjusting the upper limit of maturity of the short-term financing bonds on the basis of market performance. Article 15. The issuing period of short-term financing bonds shall not exceed 3 working days, which start from the bidding day of short-term financing bonds to the day when the relationship of debtor-creditor is established. Article 16. The form of auction shall be adopted for the issuance of short-term financing bonds, and the interest rate or price of issuance shall be independently determined by the two parties to auction. Article 17. The People's Bank of China shall authorize the China Government Securities Depository Trust & Clearing Co., Ltd. (hereinafter referred to the CGSDTC) to be responsible for setting the issuing time of short-term financing bonds. Prior to each issuance, a securities company shall apply for setting the issuing time to CGSDTC, which shall arrange for the timing according to the sequence of applications of securities companies. Application materials for issuing time shall include, but not limited to the following items: (1) a written notice of archival filing of the People's Bank of China; (2) scale of the planned issuance of short-term financing bonds; (3) term of the planned issuance of short-term financing bonds; (4) method to determine the interest rate of the planned issuance of short-term financing bonds; (5) outstanding surplus of short-term financing bonds to be repaid and its detailed information; and (6) other items required by the People's Bank of China. The CGSDTC shall determine the date of issuance and notify the issuer within 2 working days after acceptance of the application documents which tally with the prescriptions of this Article. Article 18. An issuer shall publish a prospectus for the current issuance of short-term financing bondsthrough the Chinabond website (www.chinabond.com.cn/) 3 working days before the date of issuance determined by the CGSDTC. Written legal opinions shall be issued by a law firm for the prospectus, and the contents of which shall be specific and clear, and which shall explicitly stipulate the rights and obligations of the concerned parties to the short-term financing bonds. The prospectus shall include, but not limited to the following items: (1) the basic situation of the issuer; (2) the scale, term and method to determine the interest rate of short-term financing bonds to be issued; (3) the guarantee situation of short-term financing bonds to be issued; (4) issuing period; (5) timing and form of repayment of the principal and interests; (6) liabilities of the issuer for breach of the contract; (7) objects of issuance; (8) points of attention regarding investment risks; and (9) other items required to be published by the People's Bank of China. Article 19. After the issuance of short-term financing bonds, an issuer shall announce to the market information such as the actual scale of issuance, actual interest rate of issuance and term through Chinabond website (www.chinabond.com.cn/) in the first working day following the day of registering the credits and debts. The CGSDTC shall summarize the issuance announcements regularly and report the circumstances of issuance of short-term financing bonds to the People's Bank of China. Article 20. No securities company may use the funds raised through issuing short-term financing bonds for the following purposes: (1) making fixed asset investment and establishing business outlets; (2) making investment in the secondary stock market; (3) financing the securities trading of any client; (4) making long-term equity investment; (5) any other use prohibited by the People's Bank of China. CHAPTER III TRADING, CUSTODY, SETTLEMENT AND REDEMPTION Article 21.The short-term financing bonds may be traded in the national inter-bank bond market in accordance with the Measures for Administration of Bonds Trading in the National Inter-bank Bond Market. The short-term financing bonds may be circulated and transferred from the next working day following the day of registering the credits and debts. The trading of short-term financing bonds shall be carried out through the electronic trading system of the Inter-bank Funding Center. Article 22. The short-term financing bonds shall be registered, entrusted and settled in the form of bookkeeping at the CGSDTC. Article 23. An issuer shall redeem the principal and interests of short-term financing bonds on schedule pursuant to the stipulations of announcement of issuance and shall not change the date of redemption at will. Article 24. The deadline for transferring the ownership of short-term financing bonds shall be 3 working days prior to their maturity. An issuer shall transfer the full amount of principal and interests of short-term financing bonds to be redeemed to an account specified by the CGSDTC on the date when the short-term financing bonds become mature (extended if falling on holidays), and the CGSDTC shall pay the principal and interests to the investors of short-term financing bonds. Article 25. In case an issuer fails to transfer the full amount of principal and interests of short-term financing bonds to the account specified by the CGSDTC on schedule, the CGSDTC shall announce such failure to investors through the websites of Chinamoney (www.chinamoney.com.cn) and Chinabond (www.chinabond.com.cn/) at the end of the day when the short-term financing bondsbecome mature. CHAPTER IV INFORMATION DISCLOSURE Article 26. A securities company that issue short-term financing bonds shall be obliged to disclose information to the inter-bank bond market. Article 27. The board of directors or the principal of a securities company that issues short-term financing bonds shall ensure the authenticity, accuracy and completion of disclosed information and assume corresponding legal liabilities that may arise. Article 28. A securities company that issues short-term financing bonds shall regularly disclose the following information through the electronic information system of the NIFC: (1) the balance sheets, statements of net capital, profit statements and statements of profit distribution of previous year prior to January 20 of each year; (2) the balance sheets, statements of net capital, profit statements and statements of profit distribution of the first six months of current year prior to July 20 of each year; and (3) the annual financial statements and auditing report audited by a qualified accounting company engaged in relevant businesses such as securities and options, including the full context of the auditing opinions, audited balance sheets, statements of net capital, profit statements, statements of profit distribution and appendix of the financial statements prior to April 30 of each year. Article 29. An issuer shall make a timely report under any of the following circumstances: (1) expected difficulty in repaying interests or principal on schedule; (2) deduction of capital, merger, split-up, dissolution and application for bankruptcy; (3) alteration of equities; or (4) other circumstances that should be announced prescribed by the People's Bank of China. Article 30. A listed securities company may be immune from regularly disclosing the information of items (1) and (2) of Article 27 of the present Measures. CHAPTER V SUPERVISION AND ADMINISTRATION Article 31. The People's Bank of China shall be entitled to conducting dynamic inspection at any time on the issuance and trading of short-term financing bonds of a securities company and the use of raised funds. Article 32. The People's Bank of China may reset the upper limit of an issuer's outstanding surplus of short-term financing bonds to be repaid at less than 50 percent of the original upper limit of the issuer's outstanding surplus of short-term financing bonds to be repaid in case the issuer: (1) fails to redeem the full amount of principal and interests of short-term financing bonds on schedule; or (2) fails to disclose information required twice within 3 years. Article 33. The People's Bank of China may suspend the issuance of short-term financing bonds of an issuer at the national inter-bank bond market for six months if any of the following acts arises: (1) its outstanding surplus of short-term financing bonds to be repaid exceeds the upper limit set by the People's Bank of China; (2) its raised funds of short-term financing bonds are put into prohibitive uses; (3) it has failed twice to repay the full amount of principal and interests of short-term financing bonds on schedule in six months; or (4) it has failed to disclose information required three times in 3 years. Article 34. The People's Bank of China may prohibit an issuer from issuing short-term financing bonds in the national inter-bank bond market if: (1) its membership in the National Inter-bank Funding Center is cancelled; (2) it discloses false information; (3) the CSRC finds that it isn't in conformity with any of the items (3), (4), (5) and (6) of Article 9 of the present Measures; (4) it is subject to a fine or more severe penalty imposed by the CSRC or other authorities for businesses contrary to laws and regulations; (5) two or more main financial indices of it do not meet the supervisory requirements of the CSRC; (6) it fails to repay the full amount of principal and interests of short-term financing bonds three times within 1 year; or (7) it fails to disclose information required more than three times (not included) within 3 years. Article 35. The CGSDTC shall, on each trading day, disclose the list and the holding ratio of investors, whose holding of short-term financing bonds exceeds 20 percent of the total entrusted amount of short-term financing bonds at the end of the previous trading day. Article 36. The NIFC¡¡shall be responsible for the routine monitoring of the trading of short-term financing bonds, while the CGSDTC shall be responsible for the routine monitoring of the settlement of short-term financing bonds. The NIFC and CGSDTC shall promptly report any abnormal transactions and settlements to the People's Bank of China. Article 37. The NIFC and CGSDTC shall establish corresponding rules for trading, settlement and information disclosure of short-term financing bonds pursuant to the present Measures. Article 38. Any act in the trading of short-term financing bonds contrary to the present Measures shall be subject to relevant penalties specified in the Measures for Administration of Bond Trading in the National Inter-bank Bond Market. Article 39. Any director, senior executive and person-in-charge directly responsible for disclosing false information shall be subject to a penalty specified in Article 46 of the Law of the People's Republic of China on the People's Bank of China. CHAPTER VI SUPPLEMENTARY PROVISIONS Article 40. The power to interpret the present Measures shall remain with the People's Bank of China. Article 41. The present Measures shall come into force as of November 1, 2004. |
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