Article 1 In order to regulate the registration,
depository and settlement operations of the “Mutual Access and Connection between Mainland and
Hong Kong Bond Markets” (hereinafter referred to as the "Bond
Connect"), these Rules are formulated by China Central Depository &
Clearing Co., Ltd. (hereinafter referred to as "CCDC") pursuant to the
"Measures for the Administration of Bond Transactions in the National
Inter-Bank Bond Market" (Order of PBC  No. 1), the "Interim
Measures for Administration of Mutual Access and Connection between Mainland
and Hong Kong Bond Markets "(Order of PBC  No. 1), the "Joint
Announcement of the People’s Bank of China and the Hong Kong Monetary
Authority", "the Notice of General Administration Department of the
People's Bank of China on Detailed Registration and Depository Arrangements of
‘Bond Connect’" (General Administration Department of PBC  No. 112)
and the relevant rules and regulations of CCDC.
Article 2 The “Northbound Connect” of "Bond
Connect" refers to the investment in Mainland China Inter-Bank Bond Market
(CIBM) by overseas investors from Hong Kong SAR and other parts of the world
(hereinafter referred to as "overseas investors") via the mutual
access and connection arrangements in respect of trading, depository and
settlement between Hong Kong and Mainland financial infrastructure
institutions. These Rules shall apply to the registration, depository and
settlement business under “Northbound Connect” arrangement between CIBM
investors and Central Moneymarkets Unit of Hong Kong Monetary Authority
(Hereinafter referred to as "HKMA-CMU"), which both open accounts in
Article 3 The overseas investors that invest in CIBM
using “Northbound Connect” shall conform to the requirements of PBC in respect
of the scope of eligible overseas investors and the scope of tradable and
investable bonds types.
Article 5 HKMA-CMU shall open a nominee holder bond
account (hereinafter referred to as the "bond account") in CCDC, which
shall record the balance of all the bonds held in its name and conduct
settlements of “Northbound Connect” business using the bonds in the account.
The HKMA-CMU shall
be subject to the obligations and liabilities for the bonds in its bond
Article 6 CCDC and HKMA-CMU shall sign client service
agreements. All conducting of “Northbound Connect” business by the two parties,
including bond issuance and subscription, registration and depository, interest
payment and redemption, corporate operations and other business concerned, shall
conform to these agreements and other procedures of CCDC.
Article 7 HKMA-CMU shall submit to CCDC the following documents
to open its account:
Form for Account Business of CCDC;
(2) The signed
"Client Service Agreement of China Central Depository & Clearing Co.,
Ltd. (Bond Connect)".
Article 8 CCDC shall provide bond registration and depository
service for HKMA-CMU. HKMA-CMU shall provide bond registrations and depository service
for the overseas investors that have opened accounts at CMU.
The total amount
of the bonds registered by HKMA-CMU for all the bondholders that have opened
bond accounts with CMU shall be equal to the balance of the bonds registered by
CCDC in the bond account of HKMA-CMU at CCDC.
Article 9 The bonds purchased by the overseas
investors through the "Northbound Connect" shall be registered in the
bond account of HKMA-CMU in CCDC, and the overseas investors shall enjoy the
legitimate rights and interests thereof. HKMA-CMU shall exercise the legitimate
rights to the issuers of the bonds based on the right registration of its
nominal holdings through CCDC.
Article 10 The settlement of “Northbound Connect”
business is conducted with HKMA-CMU on the one side while the participant to
CIBM that has opened its bond account at CCDC on the other side. The transfer
of bonds is processed through CCDC bonds business system, and the payment of
funds through the Cross-border Interbank Payment System (CIPS).
HKMA-CMU provides settlement
services for overseas investors participating in "Northbound Connect".
Article 11 If a bond giver has sufficient bonds for settlement,
CCDC will lock the relevant bonds. Upon completion of the payment by the payer,
both parties of settlement shall send by fax to CCDC the stamped confirmation
documents, and CCDC will conduct the bond transfer after verification.
The bonds that are
pending for settlement and the collateral related to the settlement can only be
used for the settlement. Once concluded, bond settlement is irrevocable.
Article 12 On the specified settlement date, the bond
giver shall ensure there are sufficient bonds for settlement in the bond
account opened at CCDC. Under the gross and trade by trade settlement arrangement,
the bond giver shall bear the liability for breach of contract in case of the failure
of settlement due to insufficient bonds available.
Article 13 The business hours of “Northbound Connect”
are consistent to the arrangement of CIBM.
Article 14 CCDC shall provide bond interest payment and
redemption service to the HKMA-CMU in accordance with the agreements signed by
On the record
date, CCDC shall confirm the registration list of the bondholders that have
opened bond accounts at CCDC, and shall calculate the interest and redemption
receivable by HKMA-CMU based on the balance of its bond account.
On the payment and
redemption date (deferred to next business day if the date falls in holiday), subject
to a timely and full payment by the issuers, CCDC shall transfer the interest payment
and redemption to the receiving account of HKMA-CMU.
Once CCDC has
transferred the interest payment and redemption to the receiving account
designated by HKMA-CMU, the proxy transfer services shall be deemed fulfilled.
Article 15 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  NO.1).
Article 16 CCDC shall be responsible for the authenticity, accuracy and
completeness of the depository and settlement data of CIBM participants
(including HKMA-CMU) that have opened accounts at CCDC.
submit to CCDC the depository and settlement data of overseas investors
participating in the "Northbound Connect" in accordance with the
requirements of the People's Bank of China on the implementation of the high-intensity
penetrative information collection arrangement, and shall ensure the authenticity, accuracy and
completeness of the data. CCDC shall ensures that the relevant data are
properly protected and used only for risk prevention, market service and
CCDC shall regularly
report to Ministry of Finance the information of the holders of Treasury bonds
and local government bonds.