Photo taken on June 17, 2019 shows an electronic display with Shanghai-London Stock Connect information at London Stock Exchange in London, Britain. (Xinhua/Han Yan)
BEIJING, May 23 (Xinhua) -- Chinese securities regulator and the central securities registration and settlement organization for bourses released on May 20 securities settlement-related rules to further the delivery versus payment (DVP) reform in China, reported Securities Times on May 21.
The report said rollout of the revised administrative rules on securities registration and settlement by China Securities Regulatory Commission (CSRC) and the settlement rules and settlement reserves management rules by China Securities Depository and Clearing Corporation Limited (CSDC) marked the pending formal implementation of DVP reform on China's capital market.
Among these rules scheduled to come into effect as from June 20 this year, the revised administrative rules on securities registration and settlement involve arrangements made to materialize formation and revision of the supportive rules to the DVP reform.
DVP here refers to a securities industry settlement method that ensures delivery will occur only if payment occurs and is meant to reduce risks. Once the participants default on delivery of funds or securities, the securities registration and settlement organization can dispose of the funds or securities involved in the default.
According to CSDC's settlement rules, the securities settlement mode of securities transfer on the T day and deliver of funds on the T+1 day is maintained basically unchanged and settlement participants with insufficient funds will be labeled when purchasing securities in proprietary trading and assets custody business.
CSDC will also introduce a mechanism of differentiated setting of the minimum securities settlement reserves ratios to facilitate the DVP reform as the supportive measures.
CSRC said that after learning from international practices and taking into consideration of the concrete situations on China's capital market, the DVP reform maintains the existing transaction settlement system and practices for investors basically unchanged and has no influence on individual investors.
The DVP reform is good to enhance the security of the securities settlement system in China and further attract external capital to flow into China's capital market.
Before taking effect of the rules, CSDC said it will set a simulation runtime no less than six months to give market participants time to adapt to the new rules.
Besides, the CSRC's revised rules also contain amendments made to keep in line with securities registration and settlement-related new clauses and revisions of China's new securities laws implemented since March 2020 and make adaptive adjustment to related content in rules on significant capital market reforms such as the Shanghai-Hong Kong and Shenzhen-Hong Kong stock connect programs, Shanghai-London stock connect, and rollout of depository receipts. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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