Disclosure Requirements – China – China Interbank Bond Market
Disclosure Category: 2
Clearstream Banking S.A (CBL) may be required, under PBOC SHH Notice [2016] No.2, to disclose, upon request to relevant Chinese regulatory body or government agency on the China Interbank Bond Market (CIBM), the identity and holdings of customers.
Investors holding CIBM securities are required to report if they exceed the set thresholds and/or have conducted trades under certain conditions.
Disclosure requirements
Please refer to "Disclosure obligations".
Background and legal basis
In May 2015, the People’s Bank of China (PBOC) released a notice (PBOC Notice [2015] No. 9) (the “Notice”) regarding the adjustment of the administrative policy for bond trading in the interbank bond market.
Further to the release of the Notice by PBOC, CFETS has also released the updated “National Interbank Funding Center Bond Trading and Circulation Rules” and “Trading Information Disclosure Guide” in September 2021 and in November 2021, respectively, which provides more details.
Sanctions
Failure to disclose or comply with the required disclosures may result in the below measures by CFETS and the incident will be reported to PBOC and NAFMII:
- Verbal warning;
- Written warning;
- Meeting interview;
- Public Criticising Announcement;
- Cessation of trading (period subject to CFETS).
Disclosure obligations
Monthly trading information disclosure
Investors are required to provide information disclosure for each month’s trades that fall under the below circumstances to CFETS via the Trading Information Disclosure Form within the five working day of the following month.
- An investor conducts bond trading with its parent company or other subsidiaries (branches) of its parent company, including:
- Both trading parties are independent legal entities, while one trading party is the actual controller of the other based on investment shares, holdings or agreement;
- Two trading parties are independent legal entities (or branches), while both trading parties are actually controlled by the same parent company (or headquarter)
- One trading party is the headquarter (or branch)of the other trading party;
- An asset manager conducts bond trading between its proprietary account and other account under its management, or conducts trading between two accounts which are both under its management;
- One trading party is a financial institutional CFETS member, the counterparty is its fund manager or asset manager and is a non-legal entity’s CFETS member;
- Both trading parties are non-legal entity’s CFETS members and have the same fund manager or asset manager;
- Other circumstances as specified by PBOC.
Information disclosure for substantial transaction
A single REPO transaction with amount exceeding RMB 1 billion (transactions of same tenor traded with the same counterparty on the same day shall be calculated aggregately) or other single subject with amount exceeding RMB 200 million (transactions on the same bond traded by the same counterparty on the same day shall be calculated aggregately) shall be reported by the trading parties or asset managers to CFETS in writing within five business days after trading. The written report could be a free format self-explanation letter, which shall include the transaction details, reasons for the transaction, pricing method and potential impact.
Concentration disclosure
If a single investor holds over 30% of the bond’s public issuance quantity during the course of bond trading and circulation, investor should report and disclose the required information to CFETS.
Bond issuer trading information disclosure
For pledged reversed repo transactions conducted by the bond issuer, the issuer must disclose the transaction before 10:00 of the next trading day unless there is a regulatory permitted reason not to do so.