The reform of cash versus delivery (hereinafter referred to as "DVP") was implemented. On May 20, the CSRC issued the revised Measures for the administration of securities registration and settlement (hereinafter referred to as the measures), and China Securities Depository and Clearing Co., Ltd. (hereinafter referred to as CSDCC) issued the settlement rules and the measures for the administration of settlement provisions (revised in May 2022) (hereinafter referred to as the measures for the administration of provisions), both of which will come into force on June 20, 2022.
According to relevant departments, this DVP reform adheres to the tone of "seeking progress while maintaining stability", keeps the existing settlement mode of "T-day securities transfer and T + 1-day capital settlement" of investors basically unchanged and trading habits basically unchanged, and has no impact on the majority of individual investors. If the settlement participant fails to pay the funds in full, the securities will be marked. At the same time, the payment proportion of settlement reserves also introduces a differentiated collection mechanism, and the proportion of stock reserves will be further reduced from the current 16%.
In addition, considering that market institutions need to be familiar with and adapt to the DVP reform, after the settlement rules and provisions management measures come into force, China settlement has set a simulation operation period of no less than 6 months, during which all market participating institutions will optimize their own business processes and technical systems according to the reform work arrangement.
It is reported that at present, various securities companies, commercial banks and other institutions have begun to carry out relevant technical preparations, and the preparations of market institutions for the implementation of the reform of goods and banking are advancing in an orderly manner. In the next step, the CSRC will guide the China clearing organization to do a good job in the implementation of business and technology related to the reform. China Clearing will actively organize market institutions to continue to make business and technical preparations to ensure the smooth implementation of DVP reform.
incorporate other national securities trading places approved by the State Council into the scope of application
The revision of the measures has implemented the requirements of the superior law. For example, according to the securities law, the measures include the registration and settlement of other national securities trading places approved by the State Council into the scope of application. According to the regulations on cadre work, the measures added that the appointment and removal of the chief supervisor must be reported to the CSRC for approval, and deleted the provisions that the appointment and removal of the general manager of the branch, the assistant to the general manager of the company and the person in charge of the Department of the company must be reported to the CSRC.
The measures describe the responsibilities of securities registration and settlement institutions as central counterparties, and clarify that settlement participants are responsible for the settlement of securities registration and settlement institutions.
In addition, the measures further clarify the obligation to keep investors' information confidential. According to the actual business situation, the "measures" adds three types of cases, under which the securities registration and settlement institution can handle the inquiry business according to law: the securities pledgee can inquire about the pledged securities related to himself; Inquiry on the legal performance of investor protection institutions; The supervisory committee may make inquiries and obtain evidence.
unsettled securities on t day will be "marked"
Over the years, China's capital market has implemented the settlement mode of "T-day securities transfer and T + 1-day capital settlement". At the end of T-day, securities transfer is unconditional, and securities transfer is not linked to capital settlement.
According to the revised measures, if the settlement participant has insufficient funds at the end of the t day, the securities will no longer be transferred unconditionally. At the same time of the securities transfer, the securities registration and settlement institution will mark the securities with "lock for sale and settlement", indicating that the securities are still in the process of settlement. Organize multiple batches of settlement on T + 1 day. If the settlement participant has sufficient funds, remove the securities identification and complete the settlement; If the funds are insufficient, subsequent default disposal will be carried out.
The measures also stipulates that the settlement participants shall complete the settlement of securities and funds no later than the specified final settlement time point. If multilateral net settlement is adopted, when the settlement participant defaults, the securities registration and settlement institution shall deal with the settlement consideration in accordance with the rules.
The reporter learned from relevant channels that up to now, there has been no settlement default in the self operated and custody business of institutions. Experts believe that the establishment of the above system will further improve the basic settlement system of the capital market and improve the risk prevention and control ability of China's capital market.
In addition, the measures also made adaptive adjustments to the contents related to securities registration and settlement business such as Shanghai Shenzhen Hong Kong stock connect, Shanghai Lun stock connect and depositary receipts in recent years.
introducing differentiated collection mechanism will also reduce the proportion of stock reserves
According to the official website of China settlement, the settlement rules mark the purchased securities of settlement participants with insufficient funds, establish the correlation between securities settlement and capital settlement, so as to prevent principal risk, build a multi batch settlement system, and form a default disposal arrangement covering all businesses such as brokerage, self operation and custody.
As a supporting work arrangement for DVP reform, the provisions management measures introduced a differentiated calculation and collection mechanism for the proportion of minimum settlement provisions, and adjusted the monthly effective time of the limit of minimum settlement provisions.
Specifically, the minimum settlement reserve ratio of bond cash bonds and bond repurchase is 10%. The proportion of minimum settlement provision for multilateral netting securities other than bonds is applicable to the differential calculation method. Generally speaking, after the formal implementation of DVP reform, this proportion will be further reduced from the current average of 16%.
China Clearing said that in order to give the market sufficient time to adapt to the reform, China Clearing has set up a reform simulation operation period, which shall not be less than 6 months. During this period, all market participating institutions optimized their business processes and technical systems according to the reform work arrangement, and made good business and technical preparations for the reform of goods and bank.
