On the 29th, the Ministry of Finance of China issued a notice on matters related to government bond over-the-counter trading business. The notice shall come into effect from May 1, 2024. The notice specifies that after the issuance of bookkeeping treasury bond and local government bonds is completed, they can be distributed and traded at the counter of the inter-bank bond market. The notice said that financial institutions that meet the conditions for opening counter business should actively participate in the counter trading of government bonds in accordance with relevant regulations, and select government bonds to be distributed and traded over the counter according to market demand. The over-the-counter trading of government bonds adopts a centralized and unified custody system, with primary custody and bottom-up penetration. The Central treasury bond Securities Depository and Clearing Co., Ltd. (hereinafter referred to as China Bond Depository) is the registration, custody and clearing institution for OTC government bonds. The counter business sponsor shall open a real name account for investors in China Bond Depository, through which investors directly hold government bonds. The establishment institution of counter business should establish a direct system connection with China Bond Depository and transmit real-time data related to government bond counter trading business to China Bond Depository. The establishment institutions of China Bond Depository and Counter Business shall ensure the safety of government bond redemption funds, ensure that the redemption funds reach the investor's fund account in a timely and sufficient manner, and safeguard the legitimate rights and interests of investors. The establishment institution of counter business should establish an investor suitability management system, strengthen investor education, sign legal documents such as market entry risk notification with investors, fully remind them of the tradable attributes and potential risks of counter bonds, and achieve symmetrical and transparent information on government bond counter trading. (Lai Xin She)
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