On January 14th, the China Securities Regulatory Commission officially launched the reform of the delivery of goods and banks (hereinafter referred to as DVP), and the proposed revised “securitiesRegistration and Settlement Management Measures” to solicit public comments from the market, ChinasecuritiesRegistration and Clearing Co., Ltd. simultaneously solicited opinions on the “Settlement Rules” and “Management Measures for Settlement Reserve Funds (Revised 2022)”.
DVP is a basic system generally adopted in the international market to ensuresecuritiesAfter the transaction is concluded, the vouchers will be fully settled. It has played an important role in the prevention of principal risk. The Securities Law stipulates that securities registration and clearing institutions shall provide net settlement services for securities transactions in accordance with the DVP principle.
The person in charge of the relevant departments of the China Securities Regulatory Commission said that the reform will help to strengthen the security of the settlement system from the system, and further attract foreign funds to enter the Chinese market. The reform will simultaneously reduce the minimum payment ratio of settlement reserves for settlement participants, which will help reduce the occupation of funds in the whole market and improve the efficiency of fund use.
The Securities Times reporter learned that the reform does not involve brokerage andmargin financingbusiness, keeping investors existingtransaction settlementThe system and habits remain basically unchanged and have no impact on the vast number of individual investors.
The securities with the logo set can be sold normally or used to declare various non-trading businesses on T+1 day. As long as the settlement participants complete the fund settlement in time on T+1 day, all their businesses will not be affected.Therefore, including public offeringsfundand variousfinancial managementproduct manager,QFIIInstitutional investors including RQFII managers and proprietary business of securities companies do not need to adjust their existing trading habits and trading strategies.
Improve institutional self-operation and custody and settlement systems
DVP refers to the settlement of securities and funds in the process of settlement between securities registration and settlement institutions and settlement participants. The settlement of securities and funds is mutually conditional. If and only if the settlement participant fulfills the obligation of fund settlement, the corresponding securities If the obligation of securities settlement is fulfilled, the corresponding funds will be settled. In layman’s terms, it means “paying money with one hand, and vouchers with the other”.
At present, my country’s capital market implements the settlement model of “T-day securities transfer, T+1-day fund settlement”, T-day securities transfer is unconditional transfer, and securities transfer and fund settlement are not linked. Brokerage and margin financing and securities lending businesses have achieved DVP effects through systems such as third-party depository and pre-trade capital verification and securities verification; institutional self-operated and custody businesses have not been included in third-party depository, and their settlement systems still need to be improved.
On the basis of keeping the existing transaction settlement system basically unchanged, this reform establishes the connection between securities and fund settlement by setting up the “sellable settlement lock” logo, and forms a default disposal arrangement covering all businesses.
Improving the arrangements for handling defaults in fund delivery and clarifying the process for clearing participants to declare and mark the corresponding securities to China Clearing is one of the key points of the reform of the cash-for-delivery deal.ICBCThe relevant person in charge of the Asset Custody Department told the Securities Times reporter that the relevant arrangement is custody.BankThis type of settlement participant strengthens the risk management of customers and provides an institutional basis, further strengthens the risk management capability of the settlement participant, and reduces the settlement risk of the settlement participant.
No impact on individual and institutional investors
The reform does not involve brokerage and margin financing and securities lending business, and the existing transaction settlement system and habits of investors remain basically unchanged, which has no impact on the majority of individual investors.
The securities with the logo set can be sold normally or used to declare various non-trading businesses on T+1 day. As long as the settlement participants complete the fund settlement in time on T+1 day, all their businesses will not be affected.
Therefore, institutional investors, including managers of public funds and various wealth management products, managers of QFII and RQFII, and proprietary business of securities companies, do not need to adjust their existing trading habits and strategies.
Securities Times reporters from a number ofbrokerageThe department has learned that most investors in the Chinese market have achieved the effect of preventing and controlling the principal risk of the transaction settlement of goods and silver, and the reform has basically no impact on the market.
Shenwan HongyuanChen Xiuqing, a member of the Securities Executive Committee, told the Securities Times reporter that, from the business rules related to the reform of goods and silver dealings released a few days ago, this reform has established a clearer connection between securities settlement and fund settlement by setting up signs. The risk control capability of the settlement system also respects the existing transaction settlement habits of all parties in the market, especially the settlement habits of individual investors. For the brokerage, margin financing and securities lending businesses whose settlement risks are fully controllable through systems such as third-party depository and pre-trade capital verification and securities verification, this reform will not be marked, which means that 190 million individual investors, including 190 million individual investors, will not be marked. Brokerage client securities transactions are completely unaffected and do not require any adjustments.
The ratio of settlement reserve funds was lowered by 3 percentage points as a whole
The DVP reform has simultaneously lowered the minimum payment ratio of settlement reserves for settlement participants. The reduction takes the form of differentiated reduction. Overall, the ratio of reserve funds will be reduced from the current average of 18% to about 15%.
Previously, in December 2019, when China Settlement revised the “Management Measures for Settlement Reserves” (2019 revision), a round of settlement reserve reductions was carried out. At that time, China Settlement reduced the minimum settlement reserve fund collection ratio for stock business from 20% to 18%, and based on the actual situation of the daily management and risk management of settlement participants, the minimum settlement reserve fund calculation and collection ratio for China Clearing could be adjusted, etc. The related content has been improved.
QFII and RQFII administrators
The settlement reserve is still charged according to the original method
It is worth noting that after the reform, QFII and RQFII managers still collect settlement reserves according to the original method.
China Asset ManagementThe relevant person in charge of the operation department said that institutional investors, including managers of public funds, private funds and various wealth management products, managers of QFII and RQFII, and proprietary business of securities companies, do not need to adjust their existing trading habits because of this reform. and trading strategies.
On the basis of having no impact on investors, the establishment of the goods-to-payment system and the supporting reduction of the minimum settlement reserve fund calculation and collection ratio not only improves the overall risk prevention and control of the market, but also improves the efficiency of market capital use.
In recent years, foreign investors have been paying more attention to my country’s securities market, and foreign institutions and international index companies have put forward suggestions to further improve my country’s settlement system.
Zhong Yongling, Director of HSBC China Securities Services Department, said that the launch of HSBC’s countermeasures reform has further consolidated the basic system of the capital market and improved the overall risk prevention and control capabilities of the market. The purpose is to let more foreign investors understand the Chinese capital market, enter the Chinese capital market, and even deeply participate in the Chinese capital market, so as to better serve the goal of promoting high-level two-way opening of the capital market. It gave market investors, especially foreign investors participating in my country’s capital market, a “reassuring pill”.
(Article source: Securities Times)
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