Announcement of the People’s Bank of China
[2007] No.1 With a view to perfecting the system of national inter-bank bond market makers, improving market liquidity, enhancing market price January 9, 2007 Provisions for Administering National Inter-bank Bond Market Makers Article 1 In accordance with the Law of the People’s Republic of China on the People’s Bank of China, the present Provisions are enacted with Article 2 The term “market maker” as mentioned in the present Provisions means the financial institutions that conduct the market making business Market making business means an act that a market maker, in accordance with the relevant requirements, consecutively makes bilateral Article 3 To be a market maker, a financial institution set up within the territory of the People’s Republic of China in accordance with law (1) its registered capital or net capital shall be 1.2 billion Yuan or more; (2) it shall be active in the market and its trading amount of existing bonds for the previous year shall rank top 80 when it lodges the (3) it shall have tried to conduct the market making business in the inter-bank market and have possessed necessary experience and ability (4) it shall own perfect interior control system, operation instruction and sound mechanism of interior risk control and incentive and (5) it shall own a considerably strong ability to study and analyze the bond market; (6) there are five or more employees qualified for conducting bond business in the business department concerned, the posts are reasonably (7) it shall have no record of grave violation of any law or regulation in the recent two years prior to its application; and (8) other conditions as specified by the People’s Bank of China. Article 4 To be a market maker, a financial institution shall present the following materials to the People’s Bank of China: (1) an application form; (2) its Business License (copy of the duplicate); (3) its Finance License (copy of the duplicate); (4) its interior control system and operational instruction for the market making business; (5) a brief introduction on the related business department (inclusive of personnel structure, post establishment, duty division and so (6) a report on its activities in the inter-bank market in the recent two year prior to its application (inclusive of the summary of its (7) the balance sheets, profit appropriation statements and cash flow statements (copies) of the recent two years before it submits the (8) a written statement on the fact that it has no record of grave violation of any law or regulation in the recent two years prior to (9) other materials as requested by the People’s Bank of China. A financial institution shall hold responsibility for the authenticity, accuracy and integrity of the materials it presents and there Article 5 After receiving the application of a financial institution, the People’s Bank of China shall carry out examination and approval according Article 6 A market maker may be enpost_titled to: (1) obtain the convenience to purchase bonds in the primary market; (2) have priority to become a member of the underwriting syndicates for the government bonds or the bonds of governmental development (3) have the advantage for making bond debit and credit; (4) enjoy the policy support in terms of making product innovation in the inter-bank market; (5) as regards the transaction of existing bonds or bond debit and credit conducted through the market making business, to enjoy preferences (6) have the advantage for obtaining such information as the real time quotation data and transaction data provided by the National Inter-bank Article 7 A market maker shall fulfill the obligations as follows: (1) the total number of varieties of market making bonds it has decided shall be no less than six and the varieties finally decided shall (2) the compensation terms of market making bonds shall include at least 4 of the 5 terms namely 0-1 year, 1-3 years, 3-5 years, 5-7 years (3) once a market maker decides the varieties of market making bonds, it mustn’t alter them on the current day, and shall make consecutive (4) the minimum volume of quotation of a single transaction shall be the par value of RMB 1, 000, 000 Yuan. In case any market maker is unable to perform any obligation as mentioned above by virtue of unusual circumstance, it shall report Article 8 A market maker shall, on the basis of the actual price, make bilateral quotations, whose price gap shall fall within the reasonable Article 9 A market maker shall, within 10 workdays upon the end of each season, present the People’s Bank of China a written analysis of the Article 10 A market maker may not manipulate the market. If it does so and causes any loss to the investors, it shall undertake the liability Article 11 The self-discipline organization of the inter-bank market shall, through information platforms such as the website of the People’s Article 12 The self-discipline organization of the inter-bank market shall evaluate the market-making business of the market makers on a regularly The People’s Bank of China shall adjust market makers in accordance with the evaluation results. Article 13 In case a market maker engages in market-making business or a non-market maker tries to engage in market-making business, it shall Article 14 The Funding Center shall set down operational instruction for the market-making business according to the present Provisions, which The Funding Center and China Government Securities Depository Trust & Clearing Co., Ltd. shall set down the detailed rules on Article 15 The market making business of market makers shall be subject to the examination and supervision of the People’s Bank of China. Article 16 In case any market maker or any other institution violates any provision of the present Provisions, the People’s Bank of China shall Article 17 The People’s Bank of China shall be responsible for the interpretation of the present Provisions. Article 18 The present Provisions shall go into effect as of February 1, 2007. The Circular of the People’s Bank of China Concerning Matters |
The People’s Bank of China
2007-01-09