CHINA: SZSE Outlines Changes to Bond Market

Monday January 29 2018

On 26^th January 2018, the  Shenzhen Stock Exchange (SZSE) outlined the changes it made during 2017 to its Bond Market.

Many of these changes focused on  risk prevention measures. In 2017, SZSE was proactive in strengthening front-line risk prevention through:

• classified regulation and review
• adjusting scale and structure
• enhancing dynamic supervision
• focusing on risk screening and identification
• mobilizing regulatory forces to hold the bottom line of systematic risk prevention.

SZSE imposed strict control on issuance admittance.  In order to ensure strict compliance with the requirement to “impose regulation once an issuance application is filed” and the national industrial policies, SZSE continued to focus on the real estate and sectors of excess production capacity, blocked the back door for quasi-government financing platforms, and adjusted the structure of issuers by supporting the good ones while eliminating the bad ones.

SZSE issued guidelines on credit risk management of bonds, set up a trustee-based classified regulatory system on bond risks, organized risk screening and investigation in advance.

In order to monitor abnormal fluctuations in the secondary bond market SZSE improved its risk indicators system. This development strengthened management of investor suitability, improved dynamic monitoring of market risks and the ability of real-time risk forecasting, optimized regulatory communication, increased sharing of information, united regulatory forces and improved its initiatives in resolving risks.

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