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Provisions for the Selection of Specialized Institutional Investors of Private Placement Notes

(Reviewed and adopted on October 29, 2015 at the seventh session of the Third Bond Market Professional Committee Meeting, and on November 6, 2015 at the eighth session of the Fourth Governing Council Meeting)

 

Article 1       This Provisions for the Selection of Specialized Institutional Investors of Private Placement Notes (this “Provisions”), formulated in accordance with the Administrative Rules on Debt Financing Instruments of Non-Financial Enterprises in the Interbank Bond Market (Peoples Bank of China Decree [2008] No. 1) of the People’s Bank of China and applicable self-regulatory rules of the National Association of Financial Market Institutional Investors (“NAFMII”), is designed to regulate the selection process of specialized institutional investors of private placement notes (“Specialized Institutional Investors”), expand and strengthen the pool of investment professionals, and accelerate the formation of the multi-tiered capital market.

Article 2       For the purposes of this Provisions, the term “Specialized Institutional Investor” means any institutional investor who, in addition to having significant experience in investing in the interbank market and the capacity to identify and bear related risks, is knowledgeable about the risk characteristics and investment process of private placement notes, voluntarily accepts the self-regulatory managements of NAFMII, and commits to fulfilling its obligations as a member of NAFMII.

Article 3       An institution may become a Specialized Institutional Investor if it is:

(1)     a primary dealer in the open market operations of the Peoples’ Bank of China;

(2)     a market maker in the interbank bond market;

(3)     a bond settlement agent in the interbank bond market;

(4)     an underwriter of debt financing instrument;

(5)     a core dealer of credit risk mitigation instruments or an issuer of credit risk mitigation warrant; or

(6)     an institutional investor whose average amount of bond under custody has reached a certain scale.

Article 4       NAFMII Secretariat Office has created a list of 120 Specialized Institutional Investors in accordance with Article 3 of this Provisions. The list will be published after deliberation of the Bond Market Professional Committee and the review and approval of the Governing Council of NAFMII.

Article 5       The list of Specialized Institutional Investors shall be updated annually.

Article 6       NAFMII Secretariat Office is responsible for interpreting and amending this Provisions.

Article 7       This Provisions shall come into effect as of the date of publication.