Notice of CCDC on Implementation of PBC’s Interim Procedures of Bond Connect Settlement CCDC〔2017〕No. 104

Notice of CCDC on Implementation of PBC’s Interim Procedures of Bond Connect Settlement

CCDC2017No. 104

 The English version is for reference only; the Chinese version shall prevail in case of inconsistency

 

 

Market participants,

With the purpose of ensuring the orderly undertaking of Mainland-Hong Kong Bond Connect Business, and In accordance with “Notice of General Administration Department of PBC on the Promulgation of ‘Interim Procedures of Bond Connect Settlement’”(General Administration Department of PBC2017No. 137 )(hereinafter referred to as “Interim Procedures”), China Central Depository & Clearing Co., Ltd. (hereinafter referred to as “CCDC”) hereby notifies you of the related issues as follows:

I. The settlement of bond distribution and cash bond trading

To ensure that the settlement is based on the real and effective instructions by both settlement parties, thus enhancing the legitimacy of the settlement; to reduce the operational risk caused by manual filling of the CIPS307 and CIPS308 messages by market participants; and to avoid the uncertainty due to the addition of message sending operation by correspondent banks, CCDC will now conduct bond settlement based on the confirmation documents (with electronic authentication code or seal specimen) submitted by both parties of bond distribution or settlement. Once the bond is transferred, the parties can check the bond settlement result using their ChinaBond Integrated Operation Platform (CIOP) Clients.

II. Bond distribution

1. When both parties are domestic institutions, the distribution is processed in accordance with existing procedures in the inter-bank bond market.

2. When one party of distribution is overseas investor, the distribution is processed as follows:

(1) The distribution seller needs to input instruction of “bond distribution” in CIOP, with the name of overseas investor being input as Hong Kong Monetary Authority CMU. Once the counterparty confirms the bond distribution instruction, CCDC will generate the distribution settlement contract.

(2) On the specified date of delivery, CCDC will check the bond balance of distribution seller. If the balance is sufficient for ditribution, CCDC will lock the bonds. Upon completion of the payment by the payer, the two parties of distribution shall send to CCDC their confirmation documents with electronic authentication code or seal specimen (see Annex 1) before 15:30 on the date of delivery. After the receipt and verification of the documents, CCDC will proceed with the transfer of bonds. CCDC shall not bear responsibility for the failure of distribution due to late submission of confirmation documents by either party.

(3) If the bond balance of the distribution seller is not sufficient or CCDC has not received the confirmation documents of both parties by the closing of the date of delivery, the distribution fails. In such cases, CCDC will unlock the bonds that the distribution concerns.

(4) Both parties can check the distribution instructions, distribution contracts, delivery orders and other related information and documents in CIOP.

III. The confirmation of creditor's rights

The issuer shall submit the Confirmation of the Receipt of Bond Subscription Payment (see Annex 2) to CCDC before 16:00 on the following working day after the date of payment for subscription. Upon receiving the confirmation, CCDC shall proceed with confirmation of the creditor's rights.

IV. The trading settlement

1. Upon receiving the trading date from the electronic trading platforms that are approved by PBC, CCDC will generate settlement instructions for the trading parties to confirm before forming the settlement contracts.

2. On the specified date of settlement, CCDC will check the bond balance of the bond giver.  If the balance is sufficient for settlement, CCDC will lock the bonds. Upon completion of the payment by the payer, the two parties of trading shall send to CCDC their confirmation documents with electronic authentication code or seal specimen (see Annex 3) before 15:30 on the date of delivery. After the receipt and verification of the documents, CCDC will proceed with the transfer of bonds. CCDC shall not bear responsibility for the failure of settlement due to late submission of confirmation documents by either party.

3. If the bond balance of the bond giver is not sufficient or CCDC has not received the confirmation documents of both parties by the closing of the date of settlement, the settlement fails. In such cases, CCDC will unlock the bonds that the trading concerns. Both parties shall submit to CCDC their written explanations as per requested by Announcement of PBC2013No.12.

4. Both parties can check settlement instructions, settlement contracts, delivery orders and other related information and documents in CIOP.

V. Emergency operation

1. In case of communication or system failure, the emergency business shall be handled in accordance with the “Guidelines of Emergency Operation in Case of CCDC System Failure (Trial)” (CCDC [2012] NO.1) and “Procedures of Emergency Operation of CCDC”.

2. The deadline of application for distribution emergency operation and emergency confirmation of instruction under "Northbound Connect" is 13:00.

VI. The matters not covered by the Notice shall be handled in accordance with “Depository and Settlement Rules of CCDC on Northbound Connect Business of ‘Bond Connect’” (CCDC2017No. 102) and the existing business rules and procedures of CCDC.

VII. This Notice is interpreted by CCDC and shall come into force as of the date of its promulgation.

 

CCDC

June 29, 2017

 

 

    Publish on :06/29/2017 20:39
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