Featured Product

    CBIRC Issues Rules on Equity Custody of Commercial Banks

    July 23, 2019

    CBIRC issued Rules on Equity Custody of Commercial Banks (also known as Measures) in China. The aim of these rules is to implement relevant requirements in the Interim Rules on Equity Management of Commercial Banks, improve commercial banks’ equity management, raise the transparency of commercial banks’ equity information, and carry out the look-through regulation of commercial banks’ equities. The rules consist of 21 articles in 4 chapters, including, general provisions, equity custody, supervision and management, and supplementary provisions. The rules shall come into force as of the date of promulgation.

    The rules cover the following:

    • Principle of equity custody. Listed commercial banks on the National Equities Exchange and Quotations, or NEEQ, shall follow applicable laws and regulations; unlisted commercial banks follow the market principle and choose qualified equity custodian institutions.
    • Basic framework of equity custody. Commercial banks should provide the custodian institutions with a complete register of shareholders and relevant equity information in a complete, timely, and accurate manner. The custodian institutions shall strictly abide by the service agreement signed by both parties, dutifully manage the register, and ensure that equity activities of commercial banks are conducted in a safe and efficient manner, and in compliance with relevant rules and regulations.
    • Duties of regulatory authorities. The rules clarify the responsibilities of the regulatory authorities. In addition to imposing penalties on commercial banks that violate the rules, regulators will also establish a blacklist of equity custodian institutions and share the blacklist information with relevant government agencies via the national credit information sharing platform.

    The rules specify that commercial banks should select the custodial institutions that meet the requirements in accordance with the Measures. For listed commercial banks, the Securities Law and other relevant laws and regulations have clearly required their shareholding custody and their share custody is carried out in accordance with the existing laws and regulations. For unlisted commercial banks, the current laws and regulations do not explicitly require their equity trusteeship and their equity management is highly dependent on corporate autonomy. In recent years, some banks have seen some stock chaos due to weak corporate governance. Therefore, according to the Banking Supervision and Administration Law, CBIRC requires pragmatic supervision from the perspective of prudential supervision, requiring unlisted commercial banks to escrow equity in legally established securities registration and settlement institutions, in accordance with the provisions of the Measures and not on the blacklist. In addition, the signing of a service agreement between a commercial bank and a custodian institution shall be fully included in the regulatory requirements stipulated in the Measures. For commercial banks that have already been custody, if they do not include the requirements in the agreement, a supplementary agreement shall be signed.

     

    Related Links (in Chinese)

    Effective Date: July 23, 2019

    Keywords: Asia Pacific, China, Banking, Securities, Equity Management, Regulation and Supervision, Equity Custody, CBIRC

    Related Articles
    News

    EBA Analyzes Impact of Unwind Mechanism of Liquidity Coverage Ratio

    EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.

    November 19, 2020 WebPage Regulatory News
    News

    ECB Outlines Views on Possible Changes to AnaCredit Rule and TLTROs

    In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.

    November 19, 2020 WebPage Regulatory News
    News

    IASB Begins First Phase of Post-Implementation Review of IFRS 9

    IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Report Examines Progress in Resolvability of Systemic Institutions

    FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.

    November 18, 2020 WebPage Regulatory News
    News

    EBA Benchmarks National Insolvency Frameworks Across EU

    EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.

    November 18, 2020 WebPage Regulatory News
    News

    FSB Reports Assess Impact of Pandemic on Financial Stability

    FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.

    November 17, 2020 WebPage Regulatory News
    News

    RBNZ Consults on Implementation of Capital Review Changes

    RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.

    November 17, 2020 WebPage Regulatory News
    News

    IASB Announces Andreas Barckow as the New Chair from July 2021

    The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.

    November 17, 2020 WebPage Regulatory News
    News

    HKMA Consults on Capital Rules for Bank Equity Investments in Funds

    HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.

    November 17, 2020 WebPage Regulatory News
    News

    ESRB Supports Extension of Macro-Prudential Measure by Swedish FSA

    ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).

    November 17, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 6153