People's Bank of China, Provisions for the Administration of Market Makers of the National Interbank Bond Market

中国人民银行全国银行间债券市场做市商管理规定

January 31, 2007 | BY

clpstaff &clp articles &

Access requirements to the National Interbank Bond Market for market makers lowered.

Clp Reference: 3700/07.01.09 Promulgated: 2007-01-09 Effective: 2007-02-01

Promulgated: January 9 2007
Effective: February 1 2007
Interpreting Authority: People's Bank of China
Applicability: The term "market makers" refers to financial institutions approved by the People's Bank of China to launch market-making operations that enjoy prescribed rights and bear corresponding obligations. The term "market-making operations" refers to acts whereby market makers provide two-way quotes, both bid and ask prices, on a continual basis for the types of cash bonds subject to market making on the National Inter-bank Bond Market according to relevant requirements, and that result in transactions with other market participants with reference to such quotations (Article 2).

Main Contents: Financial institutions applying to be market makers shall have registered capital or net capital of not less than Rmb1.2 billion, be active players in the market, and rank in the top 80 in terms of the volume of trading cash bonds in the year preceding the submission of the application (Article 3).

A market maker may enjoy rights such as:

(1) convenience in the purchase of bonds from the primary market; and

(2) priority to become a member of the underwriting syndicate for treasury bonds and the bonds of government-type development financial institutions and primary traders in open market businesses;

The total types of bonds subject to market making determined by each market maker shall be no less than six, and the finalized types of bonds subject to market making shall include three types: government bonds, bonds of government-type development financial institutions and non-government debentures (Article 7).

Related Legislation: PRC People's Bank of China Law (Revised), Dec 27 2003, CLP 2004 No.1 p4 and People's Bank of China, Implementing Measures for Administrative Approval, 2004

Repealed legislation: Circular on Issues Relevant to the Regulation and Support of Two-way Quotes on the National Interbank Bond Market, 2001 and Circular on Adjusting the Maximum Quote Spreads and Minimum Quote Size of Providers of Two-way Quotes, 2002

clp reference:3700/07.01.09promulgated:2007-01-09effective:2007-02-01

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