Circular on Issues Relevant to the Participation of Banks in Bond Trading on Stock Exchanges

(Issued by the China Securities Regulatory Commission, the People's Bank of China and the China Banking and Insurance Regulatory Commission on, and effective as of, August 2, 2019.)

Zheng Jian Fa [2019] No.81

Banks, the Shanghai and Shenzhen Stock Exchanges, and the China Securities Depository and Clearing Corporation Limited:

With a view to further implementing the requirements of the Central Committee of the Communist Party of China and the State Council in respect of enhancing the capabilities of finance in serving the real economy, we, on the basis of the preliminary pilot project, hereby notify you of issues relevant to expanding the scope of banks that may participate in bond trading on stock exchanges as follows:

1.   For the purposes of this Circular, the term "bank" includes policy banks, the China Development Bank, large state-owned commercial banks, commercial banks organized as joint stock limited companies, urban commercial banks, foreign-funded banks in China and other banks listed in China.

2.   Banks shall engage in competitive spot trading of bonds on the stock exchanges provided that they do so lawfully, compliantly, that risks are controllable and that business is sustainable.

3.   Matters such as the opening of securities accounts, bond registration, deposition, custody and clearance relating to bond trading by banks on stock exchanges shall be handled by the China Securities Depository and Clearing Corporation Limited in accordance with laws and rules.

4.   Banks involved in competitive bond trading shall formulate relevant internal control and risk management systems, specify their operational procedures and guard against relevant risks.

5.   In the event of a discrepancy between this Circular and previous provisions of the China Securities Regulatory Commission, the People's Bank of China or the China Banking and Insurance Regulatory Commission on the participation by banks in bond trading on stock exchanges, this Circular shall prevail.

6.   This Circular shall be effect as of the date of issuance.