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Source: 21st Century Business Herald
Author: Yang Zhijin
On June 21, the China Securities Regulatory Commission issued the “Guiding Opinions on Deepening the Reform of the Bond Registration System” (hereinafter referred to as the “Guiding Opinions”) and “Guiding Opinions on Improving the Quality of the Bond Business Practice of Intermediaries under the Registration System”, which means that the reform of the bond registration system is comprehensive. landing.
The Guiding Opinions made systematic institutional arrangements for deepening the reform of the bond registration system, and put forward a total of 12 items in four aspects including optimizing the bond review and registration system, tightening the responsibilities of issuers and intermediary agencies, strengthening the management of bond duration, and cracking down on bond violations in accordance with the law. measure.
For the registration system, information disclosure is the key. The guidance states that information disclosure requirements focusing on solvency should be strengthened. At the same time, both documents emphasize that structured bond issuance and issuance rebates are strictly prohibited, and related behaviors are severely cracked down. Considering that the inter-bank market has also increased the punishment for these two types of violations, the bond market will usher in strong supervision.
01
Strengthen the core of information disclosure
“Since 2020, all aspects have continuously deepened the implementation of the reform of the bond registration system.” Said the vice president of the investment banking department of a large securities firm.
On December 28, 2019, the Standing Committee of the National People’s Congress revised the “Securities Law”, and it will be implemented on March 1, 2020. The new “Securities Law” proposes that the public offering of securities must meet the conditions stipulated by laws and administrative regulations, and be reported to the securities regulatory agency of the State Council or a department authorized by the State Council for registration. On March 1, the National Development and Reform Commission and the China Securities Regulatory Commission issued a notice at the same time to change corporate bonds and publicly issued corporate bonds to a registration system.
The relevant person in charge of the China Securities Regulatory Commission stated that the revision and release of the new “Securities Law” in 2020 and the implementation of the registration system for public issuance of bonds have improved the efficiency and predictability of bond issuance review work and stimulated the vitality of market innovation and development. On the basis of summarizing the work experience in recent years, the China Securities Regulatory Commission has formulated guiding opinions to further improve the institutionalization, standardization and transparency of the bond issuance review and registration work, strengthen the supervision of the whole chain, and improve the quality and efficiency of serving the real economy.
“The core of the bond registration system is first of all the issuer’s information disclosure. In addition, investors should bear their own risks, and the performance of intermediaries’ duties is the foundation.” said the vice president of the investment banking department of the aforementioned large securities firm.
The guidance proposes to strengthen information disclosure requirements focusing on solvency. Information disclosure shall be true, accurate, and complete, highlight the importance, strengthen pertinence, and focus on the disclosure of information that may affect the issuer’s solvency and have a significant impact on investors’ investment decisions.
“High-quality information disclosure is the core task of the registration system reform. With the accumulation of risk management experience, information disclosure related to the issuer’s solvency has become the focus of attention.” Shi Xiaoshan, a senior researcher at the R&D Department of CSI Pengyuan, said.
Shi Xiaoshan said that the mature registration system does not impose conditions on the issuer, but only requires the issuer to provide all information related to securities issuance and ensure the authenticity of the information. The loss of investor interests caused by symmetry. At present, my country’s registration system is still in its infancy, and classified supervision is the current transitional way to control risks.
The guidance puts forward the implementation of classified supervision of issuers. In accordance with the principle of supporting the good and limiting the bad, improve the system of well-known and mature issuers and simplify the requirements for application materials; strictly control the issuers with irregular corporate governance, short-term debt, and excessive financing with high leverage. At the same time, strengthen bond financing support for key areas and major projects such as technological innovation, green development, and rural revitalization, and improve the availability and convenience of bond financing for private enterprises.
02
Strictly Prohibiting Structural Bond Issuance and Issue Rebates
The guidance also proposes to improve the arrangement of the whole chain supervision system. Specifically, the requirement of “incorporation into supervision upon acceptance” will be strengthened, and on-site inspections will be initiated in a timely manner if issuers or intermediaries are found to be suspected of violations of laws and regulations during the review. Improve bookkeeping and filing rules, strengthen compliance management requirements, and strictly prohibit issuers from directly or indirectly subscribing for bonds issued by them during the issuance process, or improperly intervene in issuance pricing through non-market methods such as rebates. Improve the continuous supervision mechanism during and after the event that is compatible with the registration system, and further improve the effectiveness of supervision.
Shi Xiaoshan said that the whole-chain supervision is based on the gradual liberalization of the issuer, and strengthens the inspection of the compliance of the issuer’s behavior, rather than the improvement of the issuer’s issuance conditions, that is, gradually realizes that the market determines the difficulty of financing, and the government conducts compliance supervision. , so as to reduce speculative behavior, identify and deal with risks in a timely manner.
Among them, the statement that “the issuer is strictly prohibited from directly or indirectly subscribing for the issued bonds during the issuance process, or improperly intervening in the issuance pricing through non-market methods such as rebates” has attracted widespread attention in the market. Among them, the former is called structured bond issuance in the bond market, and the latter is called issuance rebates. The two are two major “sicknesses” in the current bond market.
The so-called structured bond issuance refers to the fact that some bond issuers cooperate with asset management institutions due to difficulties in issuance, purchase asset management institution products with their own or bridge funds, and then invest asset management products in bonds issued by themselves. The biggest problem with structured bond issuance is distorting market pricing. The risk pricing of bonds may be distorted, and at the same time, it is easy to cause credit risk and liquidity risk.
Issuance rebate means that in order to create a better market impact, the issuer of low- and medium-rated bonds negotiates with investors to reduce the coupon rate, and at the same time compensates investors in addition to the coupon rate. Under the issuance rebate, the coupon rate of the bond cannot reflect the real credit risk of the issuer, and it is easy to breed benefit transmission. Therefore, the above two types of phenomena are also the targets that the regulatory authorities will focus on cracking down on.
“Usually, companies that choose a structured model to issue bonds and issue rebates have serious problems with their own qualifications.” said the vice president of the investment banking department of the aforementioned large securities firm.
The “Guiding Opinions on Improving the Quality of Bond Business Practices of Intermediary Institutions under the Registration System” issued by the China Securities Regulatory Commission also proposed to insist on “one case and double investigation” of issuers and intermediary agencies, and seriously investigate and deal with bond business intermediary agencies and their responsible persons for failing to do so diligently. Due diligence, crack down on illegal activities in the underwriting process such as structured bond issuance and fee rebates in accordance with the law, and standardize market order.
At the same time, the Association of Dealers has also stepped up supervision of structured bond issuance and issuance rebates. According to the reporter’s analysis, in the previous annual self-discipline punishment announcements issued by the NAFMII, the matters investigated were mainly problems such as failure to keep working papers, failure to supervise the use of funds, and low underwriting fees. This year, the matters investigated involved bond holding and issuance Deep-seated bond market chaos such as fee rebates and structured issuance.
For example, the self-discipline information released by the Dealers Association in early June shows that Jilin Bank and Yealink Bank, as investors of debt financing instruments related to Siping Urban Investment, in order to achieve the expected investment income, in addition to the coupon rate of debt financing instruments, Jilin Bank ” In the name of “fund supervision account fee”, other fees provided by Siping City Investment were collected, and Yealink Bank separately charged the profit difference provided by Siping City Investment, and the relevant institutions were also punished.
In mid-May this year, the Dealers Association convened a meeting of some major state-owned banks, some policy banks and joint-stock banks, and sent a clear signal of strict supervision, saying that it would comprehensively eliminate the chaos in the bond market.
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