Legislation roundup: Interbank financing, commercial banks' internal controls and local government bonds

Banking

People's Bank of China, China Banking Regulatory Commission, China Securities Regulatory Commission, et al, Circular on Regulating Interbank Businesses of Financial Institutions
中国人民银行、中国银行业监督管理委员会、中国证券监督管理委员会等关于规范金融机构同业业务的通知

The term for interbank borrowing may not exceed three years and that for other interbank financing may not exceed one year. Once the term expires, it may not be renewed. The net amount of interbank outward financing proceeds, excluding settlement type interbank deposits, to any one financial institution with legal personality from a commercial bank, minus assets with a risk-weighting of zero, may not exceed 50% of the bank's Tier 1 capital.

Further reading
Measures for the Administration of Interbank Negotiable Certificates of Deposit
Circular on Matters Relevant to the Entry of Money Brokers into the Interbank Market


China Banking Regulatory Commission, Guidelines on the Internal Controls of Commercial Banks (Draft for Comments on Amendments)
中国银行业监督管理委员会商业银行内部控制指引（修订征求意见稿）

The Guidelines require commercial banks to conduct assessments of the internal controls of institutions subject to consolidated management, including a commercial bank's head office, its (sub-)branches inside and outside China and subsidiaries. When a commercial bank is involved in a material acquisition or disposal, a material change in its mode of operations is made or a material change in its external operating environment occurs, it is required to arrange for the conduct of an assessment of its internal controls in a timely manner. The Guidelines suggest that the results of such an assessment serve as a key basis for evaluating the performance of the leadership team of the assessed institution.

See the digest for more details.

Further reading
Guidelines for the Consolidated Supervision of Banks (Trial Implementation)
Guidelines for the Regulation of Performance Evaluation of Financial Institutions in the Banking Sector


Finance

Ministry of Finance, Measures for the 2014 Pilot Project for the Autonomous Issuance and Repayment of Local Government Bonds
财政部2014年地方政府债券自发自还试点办法

Shanghai, Zhejiang, Guangdong, Shenzhen, Jiangsu, Shandong, Beijing, Jiangxi, Ningxia and Qingdao are allowed to arrange on their own for the issuance of local government bonds, payment of coupons and repayment of the principle within the debt issuance limit approved by the State Council. The government bonds issued by these 10 pilot regions shall be book-entry bonds with fixed coupon rates. Government bonds for 2014 shall have terms of five, seven and 10 years with a structure ratio of 4:3:3.

See the digest for more details.

Further reading
Reforming China's capital markets
First local government bonds issued