Measures for Examining and Approving the Membership Qualification of Underwriting Syndicate for Treasury Bonds

Measures for Examining and Approving the Membership Qualification of Underwriting Syndicate for Treasury Bonds

Order of the Ministry of Finance, the People's Bank of China and China Securities Regulatory Commission [2006] No. 39

July 4, 2006

The "Measures for Examining and Approving the Membership Qualification of Underwriting Syndicate for Treasury Bonds" has been discussed and approved by the Ministry of Finance, the People's Bank of China and China Securities Regulatory Commission, which are hereby promulgated for implementation from the date of promulgation.
Minister Jin Renqing
President Zhou Xiaochuan
President Shang Fulin

Attachment:Measures for Examining and Approving the Membership Qualification of Underwriting Syndicate for Treasury Bonds

Chapter 1 General Provisions

Article 1 For the purposes of regulating acts of examining and approving the membership qualification of underwriting syndicate for treasury bonds, protecting the lawful rights and interests of the applicants and the members of underwriting syndicate for treasury bonds, and promoting the smooth issuance of treasury bonds and steady market development, these Measures are hereby formulated according to the relevant provisions of the State Council.

Article 2 These Measures are applicable to the examination and approval of the membership qualification of underwriting syndicate for treasury bonds.

Article 3 Treasury bonds herein refer to certificated treasury bonds, book-entry treasury bonds and other treasury bonds issued by the Ministry of Finance in the territory of China on behalf of the Central Government.

Article 4 The membership of underwriting syndicate for treasury bonds herein refer to such financial institutions as commercial banks, securities companies, insurance companies and trust and investment companies that meet certain qualification conditions and have been approved for underwriting of treasury bonds in the territory of China.

Article 5 Underwriting syndicate for treasury bonds are set up by the varieties of treasury bonds, including underwriting syndicate of certificated treasury bonds, underwriting syndicate of book-entry treasury bonds and underwriting syndicate of other treasury bonds.
The members of the underwriting syndicate of book-entry treasury bonds are divided into Category A and Category B.

Article 6 Deposit financial institutions such as commercial banks and State Post Postal Savings Offices in the territory of China may apply to become member of underwriting syndicate for certificated treasury bonds.
Deposit financial institutions such as commercial banks and non-deposit financial institutions such as securities companies, insurance companies, trust and investment companies in the territory of China may apply to become members of underwriting syndicate of book-entry treasury bonds.

Article 7 The examination and approval of the membership qualification of underwriting syndicate of book-entry treasury bonds shall be implemented by the Ministry of Finance together with the People's Bank of China (hereinafter referred to as the "PBOC') and China Securities Regulatory Commission (hereinafter referred to as the "CSRC"), with opinions solicited from China Banking Regulatory Commission (hereinafter referred to as the "CBRC") and China Insurance Regulatory Commission (hereinafter referred to as the "CIRC').
The examination and approval of the membership qualification of the underwriting syndicate of certificated treasury bonds shall be implemented by the Ministry of Finance together with the PBOC, with opinions solicited from the CBRC.

Article 8 The establishment of the underwriting syndicate of treasury bonds shall abide by the open, fair and just principles and adopt survival of the fittest based on keeping basically stable members. The number of the members of the underwriting syndicate of certificated treasury bonds shall not be exceed 40 in principle; and the number of the members of the underwriting syndicate of book-entry treasury bonds shall not exceed 60 in principle, among which the number of Category A members shall not exceed 20.

Article 9 The valid term of the membership qualification of the underwriting syndicate for treasury bonds is 3 years, and upon its expiration, the membership qualification shall be examined and approved according to the measures once again.

Chapter 2 Qualifications and Conditions

Article 10 The applicants shall meet the following essential requirements:
(1) Financial institutions established according to law in the territory of China;
(2) Legally carrying out management with good credit, without record of any significant violations in the past 3 years in operation and management;
(3) having sound finance, with indexes of capital adequacy, solvency or net capital meeting regulatory standards, and high capability for risk control;
(4) Having dedicated department responsible for operation of treasury bonds and complete treasury bond investment and risk management system;
(5) High level of information management; and
(6) Capable for performing and willing to perform the liabilities specified in Chapter 6 of these Measures

Article 11 The applicants for the membership qualification of underwriting syndicate of certificated treasury bonds shall be eligible for the following conditions:
(1) conditions specified in Article 10 of these Measures;
(2) the deposit financial institutions with registered capital no less than RMB300million or total assets of RMB10billion or more;
(3) 40 or more business network points.

Article 12 The applicants for Category B membership qualification of underwriting syndicate of book-entry treasury bonds shall meet the following conditions:
(1) conditions specified in Article 10 of these Measures
(2) the deposit financial institution with registered capital no less than RMB300 million or total assets of RMB10billion or more, or the non-deposit financial institution with registered capital no less than RMB800million.

Article 13 The applicant for Category A membership qualification of registered underwriting syndicate of book-entry treasury bonds shall, in addition to meeting the conditions specified in Article 12 of these Measures, have its overall ranking in book-entry treasury bond businesses among top 25 in the previous year.

Chapter 3 Application, Examination and Approval

Article 14 The Ministry of Finance shall conduct examination and approval on the membership qualification of underwriting syndicate of treasury bonds together with the PBOC and the CSRC and the information such as deadline for the applicants to apply for the membership qualification of underwriting syndicate of treasury bonds shall be published in advance so as to ensure that the applicants have enough time to prepare application materials.
The applicants shall put forth application before the deadline of application, and submit the following application materials:
(1) Application;
(2) Profile of the institution;
(3) Copies of corporate business license and financial business permit;
(4) Copy of auditing report on financial budget of the previous year;
(5) Treasury bonds underwriting and dealing of the previous 2 years.
The applicants that apply for membership qualification of underwriting syndicate of certificated treasury bonds shall submit the application materials to the Ministry of Finance and the PBOC respectively; and the applicants that apply for membership qualification of underwriting syndicate of book-entry treasury bonds shall submit the application materials to the Ministry of Finance.

Article 15 The Ministry of Finance shall review the application materials for membership qualification of underwriting syndicate of book-entry treasury bonds, and review the application materials for membership qualification of underwriting syndicate of certificated treasury bonds together with th4e PBOC and make the treatment according to the following circumstances:
(1) In case of incomplete application materials or application materials not conforming to statutory forms, it is necessary to inform the applicant of all the content to be modified on spot or within 5 days, and in case of failure of such notification in time, the application materials shall be deemed as accepted from the date of receipt;
(2) In case of complete application materials conforming to statutory forms, or in case the applicant has submitted all the modified application materials according to the requirements, the application for examination and approval shall be accepted.
Whether accepting the examination and approval application for membership qualification of underwriting syndicate of treasury bonds or not, the Ministry of Finance shall issue a written certificate affixed with special seal with date stamped.

Article 16 The Ministry of Finance solicit opinions from the CBRC and the CIRC in such matters as material operation activities, status of financial risks, financial market performance, any records on material violations during the past 3 years relating to the applicant.

Article 17 The Ministry of Finance shall hold meetings of examination and approval of membership qualification of underwriting syndicate of certificated treasury bonds, and examine and verify the application materials together with the PBOC.
The Ministry of Finance shall hold meetings of examination and approval of membership qualification of underwriting syndicate of book-entry treasury bonds, and examine and verify the application materials together with the PBOC and the CSRC.

Article 18 Together with the PBOC and the CSRC, the Ministry of Finance shall select the best and determines the members of the underwriting syndicate of treasury bonds among the applicants eligible according to their paid-up capital, asset size, operation performance, ranking among peers, and comprehensive ranking in terms of treasury bond business.

Article 19 Before deciding on examination and approval of the membership qualification of the underwriting syndicate of treasury bonds together with the PBOC and the CSRC, the Ministry of Finance shall inform the applicants of their rights to request for hearing.
Such hearing shall proceed according to the "Methods for Hearing on Implementing Administrative License by Financial Authorities" (No.
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