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PBOC promulgated the Interim Provisions on the Administration of the Bond lending Business in the National Inter-Bank Bond Market |
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Julian |
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PBOC promulgated the Interim Provisions on the Administration of the Bond lending Business in the National Inter-Bank Bond Market
On November 2, 2006, the People’s Bank of China promulgated the Interim Provisions on the Administration of the Bond lending Business in the National Inter-Bank Bond Market.
These interim provisions permit the parties involved to agree on the time limit of bond lending (may not exceed 365 days) and the standards of charges for bond lending; permit the market participant to reach the transaction either via the trading system of the National Interbank Funding Center (hereinafter referred to as the “NIFC”) or through other means such as telephone and facsimile; require that when conducting bond lending by the market participants, the bond borrower should provide the bond lender with sufficient amount of bonds as mortgage
These provisions also require that once the borrowed balance of bond lending by any single institution exceeds 30% (inclusive) of the total amount of its own securities in custody or once the borrowed balance of a single bond exceeds 15%(inclusive) of the issued amount of such bond, such institution should make a written report to the NIFC and the CDC and explain the reasons thereof for each increase of 5 percentage points. These provisions became effective on 20th of this month.
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