On the 14th, the CSRC and China Securities Depository and Clearing Co., Ltd. publicly solicited opinions on the administrative measures for securities registration and settlement, settlement rules and other rules and regulations, and China’s capital market ushered in the reform of cash versus goods.
The person in charge of relevant departments of the CSRC said that the settlement of most securities transactions in China’s capital market has achieved the effect of cash for goods, and only the settlement system of institutional proprietary and custody business needs to be further improved. This reform complies with the needs of the reform and development of China’s capital market, implements the requirements of the securities law for the implementation of goods and bank settlement, and adheres to the principle of stability and seeking progress in stability. “Unchanged” is the existing trading settlement habits of investors, and individual investors are not affected. The “change” is that the securities at the end of t day in the settlement system are no longer unconditionally transferred, but are associated with capital settlement.
The cash against delivery system is a mechanism that links securities delivery and capital delivery, which can be commonly understood as “paying money and securities (Securities) on the one hand”. The general idea of the reform is to establish the relationship between securities settlement and capital settlement by marking on the basis of keeping the existing transaction settlement system and habits of investors basically unchanged, and improve the disposal arrangements for breach of contract.
According to the person in charge of China’s settlement, China’s capital market implements the settlement mode of “T-day securities transfer and T + 1-day capital settlement”. The securities transfer on t day is unconditional, and the securities transfer is not linked to the capital settlement. Through the external risk control system with Chinese characteristics, such as the third-party deposit of customer transaction settlement funds, full margin, capital verification and securities verification before transaction, the principal risk control requirements have been realized in the brokerage business and margin trading business.
For the self operated and custody businesses that do not adopt the third-party depository and full margin system, this reform establishes the relationship between securities settlement and capital settlement. If the settlement participant has insufficient funds at the end of t day, the securities registration and settlement institution shall mark the corresponding securities with the “lock for sale and settlement” mark at the same time of securities transfer. If the funds on T + 1 day are sufficient, the securities identification shall be removed and the settlement shall be completed; If the funds are insufficient, subsequent default disposal shall be carried out.
“This reform is the improvement of the basic system of the capital market. It will not set up signs for the brokerage business and margin trading business that have achieved the effect of goods and banks. The securities trading of brokerage customers, including 190 million individual investors, will not be affected at all, and there is no need to make any adjustment for this.” Chen Xiuqing, vice chairman of the custody and Settlement Committee of the China Securities Association, said.
The head of Industrial And Commercial Bank Of China Limited(601398) asset custody department said that for institutional investors involved in the reform, the marked securities can be normally sold or used to declare various businesses on T + 1. As long as the settlement participants complete the capital settlement in time on T + 1, all their businesses will not be affected.
As a supporting measure for this reform, the securities registration and settlement institution plans to reduce the settlement provision synchronously, set the collection proportion of the minimum settlement provision differently according to the specific collection and payment time point of funds of each settlement participant, and reduce the minimum collection proportion of stock business from 18% to about 15% as a whole.
