SSE, SZSE Revises Rules to Optimize Bond Market
The SSE (Shanghai Stock Exchange) and the SZSE (Shenzhen Stock Exchange) on Friday (22 April) each issued a set of four regulations for securities businesses, seeking to optimise and strengthen the support system for corporate bond registration.
The regulations were proposed in May 2021 to implement the requirements of China's new Securities Law, which took effect in March 2020 and established the fundamental structure for a registration system for corporate bonds.
The regulations cover reviews of corporate bond issuance, listing, privately issued corporate bonds, and investor suitability, and have been approved by the CSRC (China Securities Regulatory Commission), the SSE and SZSE said.
The stock exchanges said the new batch of regulations will create a more standardised, user-friendly and transparent bond market through stronger disclosure requirements and improved auditing standards.
Specifically, disclosure requirements have been strengthened for major changes in an issuer's equity structure, major assets being mortgaged or pledged for financing, and other major events. Directors, supervisors, and senior executives are required to sign a written confirmation opinion on the issuer's information disclosure documents, and disclose any objections.
The regulations also simplify listing requirements, promote greater market participation, clarify the conditions for listing terminations, and enhance supervision.
The SSE and SZSE emphasise the role of self-discipline, imposing obligations on issuers, controlling shareholders, actual controllers, intermediaries and related personnel to ensure compliance with the rules.
The responsibilities of intermediaries in conducting reviews are also clarified, obligating underwriters and securities services agencies to inspect and verify the authenticity, accuracy and completeness of issuer disclosures, and express clear opinions as to whether the issuer meets the issuance and listing conditions.
The regulations also strengthen investor protection mechanisms with additional requirements for bondholder meetings, dispute resolution, investor classification and suitability, among other areas.
The rules also remove mandatory rating arrangements and rating indicator requirements, a move aimed at addressing false high ratings, insufficient discrimination among issuers, and weak pre-warning functions among rating agencies.
Separately, new rules for bond trading take effect on Monday (16 May). These rules, finalised in January, make it easier for institutional investors to directly participate in the exchange-traded bond market, introduce new modes of trading, and allow bond investors flexibility to choose their settlement method and cycle.
Source: Regulation Asia
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