People's Bank of China, Administration of the Trading of Book-entry Treasury Bonds at Commercial Bank Counters Procedures

Promulgated: April 3 2002
Effective: as of date of promulgation
Interpreting authority: People's Bank of China
Applicability: For the purposes of these Procedures, "book-entry treasury bonds" means book-entry treasury bonds designated by the Ministry of Finance and approved by the People's Bank of China as tradable at commercial bank counters; "trading of bonds at commercial bank counters" (hereafter, counter trading) means trading bonds between commercial banks and bond investors through the business networks of commercial banks; and "investors" means individual and non-financial institution investors (Articles 2, 3 and 5).

Main contents: Subject to approval of the People's Bank of China (PBOC) in consultation with the Ministry of Finance (MOF), a commercial bank may apply to become a participating bank of counter trading (Article 4). The applicant bank must have been a leading participant in the national interbank bond market for the last two years and a member of the distributing syndicate of treasury bonds for the last three years (Article 10). Counter trading shall be processed through the counter trading system of the participating banks (Article 17). Investors shall open depository accounts for the trading in their real names and shall open or designate corresponding funds accounts (Article 19). The difference between the selling and buying prices quoted by the participating banks shall be within the margin determined by the PBOC in consultation with the MOF (Article 21). The participating banks may adjust the selling and buying prices according to market conditions (Article 22). The PBOC designates Central National Debt Registration and Settlement Company Limited as the primary custodian and the participating banks as the secondary custodians in respect of the treasury bonds so traded (Article 7).