National Association of Financial Market Institutional Investors. Public Announcement

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1 Unofficial English Translation* National Association of Financial Market Institutional Investors Public Announcement [010] No. 14 Public Announcement regarding Matters relating to Filing of Interbank Market Credit Risk Mitigation Instruments (Pilot Scheme) In order to enhance self-disciplinary management on credit risk mitigation instruments pilot scheme and promote the normalized development of the pilot scheme, in accordance with the Guidelines for Interbank Market Credit Risk Mitigation Instruments (Pilot Scheme) (the Guidelines ), the public announcement regarding certain matters relating to filing under the pilot scheme are hereby published as follows: 1 A participant in the pilot scheme who intends to become a Dealer or Primary Dealer for credit risk mitigation instruments or an Issuer of credit risk mitigation certificates (the Participant ) shall submit for filing the materials in accordance with the content and format requirements as set out in the Materials for Filing (see Appendix 1), to the NAFMII Secretariat Office in both electronic version and paper form. The electronic document shall be prepared in PDF format and sent to crmba@nafmii.org.cn as attachments. In accordance with its own situations and willingness, a Participant may submit multiple sets of filing materials simultaneously (the same material can be integrated), and this shall be expressly noted in its explanation for filing. By 1:00pm of the next working day following entering into a transaction, a Dealer or a Primary Dealer shall truthfully record the credit risk mitigation instruments trading information in the Trading Information Filing Form (see Appendix ), and send it to crmti@nafmii.org.cn as attachment. The subject of the and the file name of the attachment shall be named as trading information (full name of the sender) (trade date). 3 An Issuer of credit risk mitigation certificates shall submit registration documents for issuance of certificate in manners by reference to article 1 of this Public Announcement, and shall report the result of issuance in the same manner as article of this Public Announcement. 4 By 1:00pm of the first working day in every week, a Dealer, a Primary Dealer or an Issuer of credit risk mitigation certificates shall truthfully record the credit risk mitigation instruments risk exposure information for the immediately preceding week in the Risk Exposure Filing Form (see Appendix 3), and send it to crmti@nafmii.org.cn as attachment. The subject of the and the file * While every effort has been made to ensure the accuracy of our translations, it is not possible to guarantee an exact English translation of Chinese legal and regulatory provisions since each language has its own grammatical structures, embodies different legal and cultural concepts and is open to different interpretations.

2 name of the attachment shall be named as exposure information (full name of the sender) (reporting period). 5 The Participants shall submit the credit rating report, financial report and other materials of which the disclosure is required by the Guidelines to the NAFMII Secretariat Office in both electronic version and paper form. The electronic documents shall be prepared in PDF format and sent to crmid@nafmii.org.cn as e- mail attachments. The subject of the and the file name of the attachment shall be named as (name of disclosure material) (full name of the sender) (reporting period). 6 In order to improve the information security, when submitting electronic documents, a Participant shall use the specific address assigned to that entity by NAFMII to send information to the address specified in this Public Announcement. Entities who have not been assigned with specific addresses shall apply to NAFMII for such address in advance. 7 A Participant shall ensure that the filed information is truthful, accurate and complete. 8 A Participant shall designate the persons who are in charge of the relevant filings, and shall inform the NAFMII Secretariat Office of the contact information of such persons. 9 If a Participant can not submit the filing materials on time for certain reasons, or needs to modify filing information that is already submitted, the Participant shall promptly contact the NAFMII Secretariat Office and submit relevant explanations in accordance with the relevant requirements. Contact telephone number: Facsimile: It is hereby published by public announcement. Appendix 1: Materials for Filing Appendix : Trading Information Filing Form Appendix 3: Risk Exposure Filing Form National Association of Financial Market Institutional Investors 9 October 010

3 Appendix 1 MATERIALS FOR FILING I Filing Materials for Dealers A Participant who intends to become a Dealer for interbank market credit risk mitigation instruments shall submit the following filing materials, affixed with its chop, to NAFMII: 1. Filing application A filing application shall include the following contents: (1) intention of filing; () brief description of the relevant business departments; This shall contain information including titles and positions, résumés of staff members, allocation of functions and responsibilities etc. The Participant shall satisfy the criteria set out in article 6 of the Guidelines, namely having three or more staff members with relevant transaction experience and business qualifications and equipped with relevant system and staff for directly participating in interbank market transactions. (3) a written declaration that it has not committed any breach of law or material violation of regulations within the last two years; and (4) an explanation describing its relevant business conducted on interbank market within the last two years; This shall demonstrate that it meets the requirement set out in article 6 of the Guidelines, namely with internal capability to conduct valuation and risk assessment of derivatives and being able to assume risks associated with derivatives.. A photocopy of the duplicate of its Business License bearing the latest annual inspection mark. 3. A photocopy of the duplicate of its Financial License (if applicable). 4. Table of calculation of its net assets as of the end of last year (applicable to securities companies). 5. Internal control mechanism, risk management mechanism and internal operating rules for transacting derivative products. 6. Other materials as requested by NAFMII. II Filing Materials for Primary Dealers A Participant who intends to become a Primary Dealer for interbank market credit risk mitigation instruments shall submit the following filing materials, affixed with its chop, to NAFMII: 3

4 1. Filing application A filing application shall include the following contents: (1) intention of filing; () brief description of the relevant business departments; This shall contain information including titles and positions, résumés of the staff members, allocation of functions and responsibilities etc. The Participant shall satisfy the criteria set out in article 7 of the Guidelines, namely having an independent financial derivatives trading department, and having no less than five staff members with relevant transaction experience and business qualifications and having an independent risk management department and with relatively strong capability to conduct risk management, and having no less than five risk management staff members. (3) a written declaration that it has not committed any breach of law or material violation of regulations within the last two years; and (4) an explanation describing its relevant business conducted on interbank market within the last two years. This shall demonstrate that it meets the requirement set out in article 7 of the Guidelines, namely having a track record of conducting financial derivatives business for no less than two years and having relatively strong capability to conduct valuation and pricing of financial derivatives, and having been acting actively in making quotation and trading of financial derivatives.. A photocopy of the duplicate of its Business License bearing the latest annual inspection mark. 3. A photocopy of the duplicate of its Financial License (if applicable). 4. A copy of the administrative approval issued by its authority-in-charge approving it to be a market maker of the interbank bond market, or a market maker of the interbank foreign exchange market. 5. Table of calculation of its net assets as of the end of last year (applicable to securities companies). 6. Internal control mechanism, risk management mechanism and internal operating rules for transacting derivative products. 7. Other materials as requested by NAFMII. III Filing Materials for Certificate Issuers A Participant who intends to become an Issuer of interbank market credit risk mitigation certificates shall submit the following filing materials, affixed with its chop, to NAFMII: 1. Filing application A filing application shall include the following contents: 4

5 (1) intention of filing; () brief description of the relevant business departments; This shall contain information including titles and positions, résumés of the staff members, allocation of functions and responsibilities etc. The Participant shall satisfy the criteria set out in article 15 of the Guidelines, namely staffed with professional personnel for conduct credit risk mitigation certificates business and equipped with the requisite business systems and information systems and having relatively strong capability to conduct valuation and credit risk management, having extensive credit risk management experience, and having no less than five risk management staff members. (3) a written declaration that it has not committed any breach of law or material violation of regulations within the last two years; and (4) an explanation describing its relevant business conducted on interbank market within the last two years;. A photocopy of the duplicate of its Business License bearing the latest annual inspection mark. 3. A photocopy of the duplicate of its Financial License (if applicable). 4. Table of calculation of its net assets as of the end of last year (applicable to securities companies). 5. Internal control mechanism, risk management mechanism and internal operating rules for transacting derivative products. 6. Internal operating rules and business management system for issuance of credit risk mitigation certificates. 7. Other materials as requested by NAFMII. IV Registration Documents for Issuance of Certificate 1. Certificate prospectus; It shall specify the relevant matters for issuance of the certificate including, without limitation, the reference entity, the reference obligation, notional amount, term of protection, credit events, settlement method after occurrence of credit events, holders meeting, provisions regarding cancellation of certificate, etc. The provisions for holders meeting may refer to the Rules for Meetings of Holders of Interbank Bond Market Non-financial Institution Enterprise Debt Financing Instruments, and the provisions for cancellation of certificate shall expressly provides for the time and manner for the cancellation.. Proposed disclosure documents for issuance of certificates: This shall include certificate issuance public announcement, the credit rating report and the financial report of the Issuer, etc. 5

6 3. Other materials as requested by NAFMII. 6

7 Appendix TRADING INFORMATION FILING FORM Trading Information Filing Form for Credit Risk Mitigation Contracts Full Name of Filing Entity: Series No. 1 Trade Date Counterparty Reference Entity Name Rating (if available) Name of Obligation (1) Reference Obligation Interest Rate () Size of Obligation (unit of RMB 10,000) (3) Rating (if available) Remaining term to maturity Buy /Sell Notional Amount (unit of RMB 10,000) First Payment Date Term Credit Events (4) Settlement Method (5) Remarks: (1) Where the Reference Obligation is bond, fill in the short name of the bond; where the Reference Obligation is other similar debts, fill in the full name of the debt, for example working capital loan provided by Bank A. () Where the Reference Obligation is bond, fill in the coupon rate for the bond; where the Reference Obligation is other similar debts, fill in the interest rate of the debt, for example interest rate for loan: xx%. (3) Where the Reference Obligation is bond, fill in the issuance size for the bond; where the Reference Obligation is other similar debts, fill in the total amount of the debt obligation, for example total loan amount: xxx. (4) Credit events include bankruptcy, payment default, obligation acceleration, obligation default, restructuring and others. (5) This refers to the settlement method after the occurrence of the credit event and includes, according to the relevant provisions of the NAFMII Master Agreement, cash settlement and physical settlement etc.. 7

8 Trading Information Filing Form for Credit Risk Mitigation Certificates Full Name of Filing Entity: Series No. Trade Date Counterparty Short name of Certificate Code of Certificate Buy /Sell Trade Price Trade Amount Settlement Date (T+x) 1 8

9 Appendix 3 RISK EXPOSURE FILING FORM Full Name of Entity Reporting Period Aggregate of Outstanding Contracts Aggregate Market Value of Outstanding Contracts Aggregate Net Position of Notional Amounts Series No. 1 Counterparty Buy Sell Net Position Series No. 1 Reference Obligation Term Buy Sell Net Position Series No. Type of Instruments 1 Contracts Certificates Buy Sell Net Position Remarks: The calculation date of this table is the last working day for the reporting period; Net position = Buy - Sell 9

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