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Article 1. The present Provisions are hereby formulated in accordance with the Law of the People's Republic of China on the People's Bank of China, Contract Law of the People's Republic of China, and the provisions of the relevant laws for the purpose of promoting the further development of the bond market, regulating the business of buying back bonds through buyout, preventing market risks, and maintaining the legal rights and interests of the market participants. Article 2. The "business of buying back bonds through buyout" (hereinafter referred to the buy-back through buyout) mentioned in the present Provisions refers to the transaction act that when the bondholders (the positive buy-back party) sell bonds to the buyers (the counter buy-back party), the two transaction parties agree that the positive buy-back party may buy back the same amount of bonds of the same kind from the counter buy-back party at the agreed price on a certain date in the future. Article 3. The scope of the kinds of bonds bought back through buyout shall be the same as the bonds traded in cash. Article 4. The principles of fairness, good faith, self-discipline and self-bearing of risks shall be followed for the buy-back through buyout. The market participants shall establish and improve the corresponding internal management systems and risk prevention mechanism. The "market participants" mentioned in the present Provisions shall have the same meaning as the "market participants" prescribed in the "Measures for the Administration of Bond Transaction in Inter-bank Bond Markets Nationwide", which were promulgated by the People's Bank of China. Article 5. The market participants shall sign a master agreement for the buy-back through buyout when making buy-back through buyout, which shall have the clause for guaranteeing contract performance, so as to ensure the earnest performance of the contract of buy-back through buyout. Article 6. The market participants shall sign a written contract for each item of business of buy-back through buyout, the written forms shall include the trading books formed in the transaction system of the National Interbank Funding Center (hereinafter referred to the NIFC), or the contract, letters and electronic data interchange, etc.. The master agreement of buy-back through buyout and the preceding written forms of contracts constitute the complete set of contract for the buy-back through buyout. And a supplementary agreement may also be signed if the two parties of transaction believe it necessary. Article 7. During the period of buy-back through buyout, the two parties of transaction shall not exchange the bonds, or complete a business transaction in cash, or redeem the bonds ahead of schedule. Article 8. There should be enough bonds and funds when completing a business transaction on buy-back through buyout. Article 9. The transaction in buy-back through buyout shall be made at net price, but shall be settled at full price. Article 10. The net price of the initial transaction and the term transaction of the buy-back through buyout, and the amount of bonds bought back shall be determined by the two parties of transaction, but the net price of the term transaction plus the newly increased interests of bonds computable during the buy-back period shall be more than the net price of the initial transaction. Article 11. The term for buy-back through buyout shall be determined by the two parties of transaction, but shall not exceed 91 days at the maximum. And the two parties of transaction shall not extend the term of buy-back by any means. Article 12. The proportion of the sum of balance of the initial buy-back through buyout to the par value of the bonds bought back shall correspond with the relevant provisions of the People's Bank of China. Article 13. When making the buy-back through buyout, the two parties of transaction may set down deposit money or deposit bonds through negotiation according to the credit status of the counter party of the transaction. When setting down deposit bonds, the deposit bonds shall be frozen in the account, which shall be managed by the entrustment of the party of transaction who provide such deposit bonds. Article 14. When making the buy-back through buyout, the balance of the bonds of a single kind of bond to be bought back of any market participant shall be less than the 20% of the turnover of such bond, and the total balance of the bonds to be bought back of any market participant shall be less than 200% of the total self-managed bonds that are managed by the entrustment of the Central Treasury Bonds Registration and Settlement Company, Ltd. (hereinafter referred to the Central Settlement Company). Article 15. In case there is any breach of contract in the buy-back through buyout, and there is any dispute over facts of or liabilities for the breach of contract, the two parties of transaction may apply for arbitration by agreement or file a lawsuit to the people's courts, and report the final results of arbitration or litigation to the Inter-bank Center and the Central Settlement Company, who shall, within 5 working days after receiving the report, make a public announcement on the final results. Article 16. The NIFC and the Central Settlement Company shall, according to the provisions and authority of the People's Bank of China, disclose to the market in time the relevant information concerning the buy-back through buyout, such as the proportion that the total balance of the bonds of a single kind to be bought back in the buy-back through buyout to the turnover of such kind of bonds in the last transaction date. Article 17. The NIFC shall be responsible for the work of routine monitoring on the transaction of the buy-back through buyout, and the Central Settlement Company shall be responsible for the work of routine monitoring on the settlement of the buy-back through buyout, and report in time the abnormal transaction or settlement found out to the People's Bank of China. Article 18. The NIFC and the Central Settlement Company shall formulate rules of transaction and settlement for the buy-back through buyout in accordance with the present Provisions. Article 19. All the branches of the People's Bank of China shall make routine supervision over the buy-back through buyout of the market participants within their own jurisdictions. Article 20. In addition to observing the present Provisions, other relevant provisions on the inter-bank bond markets nationwide shall also be followed when making the buy-back through buyout. Article 21. Where any market participant or the NIFC or Central Settlement Company violates the present Provisions, the People's Bank of China shall impose punishments on him/it in accordance with the provisions of Article 46 of the Law of the People's Republic of China on the People's Bank of China. Where any market participant violates other relevant provisions on the inter-bank bond markets nationwide when making the buy-back through buyout, the People's Bank of China shall impose a punishment on him/it in accordance with the provisions of Article 46 of the Law of the People's Republic of China on the People's Bank of China. Article 22. The power to interpret the present Provisions shall remain with the People's Bank of China. Article 23. The present Provisions shall be implemented as of May 20, 2004. |
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