On 5 May 2023, SZSE officially released theBusiness Guidelines for the Duration Regulation of Corporate Bonds No. 1 – Periodical Reports(the “Guidelines for Periodical Reports”) and the Business Guidelines for the Duration Regulation of Corporate Bonds No. 2 – Interim Reports(the “Guidelines for Interim Reports”). The guidelines aim to further strengthen the building of the information disclosure mechanism with a focus on solvency, enhance the effectiveness and pertinence of information disclosure, urge market entities to fully fulfill their responsibilities, and improve the quality and efficiency of bond duration regulation.

Focusing on solvency and stressing the effectiveness of information disclosure

TheGuidelines for Periodical Reportshas comprehensively and systematically laid out the requirements on disclosure by corporate bond issuers through periodical reports, emphasized the disclosure of issuers’ overall business conditions and risk levels and highlighted analysis of material changes.First,it has strengthened the requirements on the disclosure of issuers’ business conditions and stressed the analysis of changes in business segments and operations, significant related-party transactions, change of de facto controller, etc.Second,it has refined the requirements on disclosure of events that have important impact on solvency, requiring issuers to detail changes in important items of assets and liabilities, changes in the scope of consolidated financial statements, overdue major debts, etc. in disclosures.

The Guidelines for Interim Reportsis an amendment to theGuidelines for the Information Disclosure Formats of Interim Reports on Corporate Bonds. Based on daily regulation and risk disposal practices, theGuidelines for Interim Reportshas further strengthened the timely disclosure and warning of major events and optimized disclosure arrangements.

First,it has unified the disclosure requirements of common elements in interim reports on major events and laid out the countermeasures for disclosures involving negative impact that should be made.

Second,it has added requirements on disclosure of events closely related to credit risk, including the establishment of a financial institution creditors’ committee and the abnormal fluctuations in transaction prices. It has also detailed the specific circumstances for the disclosure of debt default and compensation risk from credit enhancement.

Third,it has optimized disclosure arrangements, including the disclosure time of cumulative events such as newly increased loans, external credit enhancement, surrender of property, seizure of assets, etc.

Fourth,it has added the requirements on disclosure of implementation of resolutions of holders’ meetings, resale arrangements, etc.

Focusing on special disposal procedures and improving the pertinence of information disclosure

For the issuers who are in the bankruptcy proceedings and meet the market-based reorganization as described in the guidelines, both guidelines have laid out specific information disclosure requirements.First,they require issuers to mainly disclose the assets and liabilities that have material impact on liquidation or risk disposal.Second,they have specified disclosure requirements for key nodes such as important bankruptcy procedures, phased progress of risk disposal, etc.Third,they have simplified the requirements on the disclosure of general information, allowing issuers to make quarterly summary disclosures through interim reports on most events except major events that directly affect the status of corporate bonds, holders’ equity or the progress of risk disposal which are required to be disclosed in a timely manner.

Refining the information disclosure requirements of relevant institutions and ensuring market entities' responsibilities are fully fulfilled

The two guidelines have refined the requirements on disclosure of credit enhancement entities, trustees, etc. and further urged relevant market entities to perform their duties.First,for credit enhancement entities, the guidelines have set the scope of information disclosure obligations and preparation requirements of their annual reports and refined the requirements on disclosure of major events that may affect their solvency including such cases as being sued or applying for arbitration for compensation disputes, failing to fulfill compensation obligations according to agreement, loss of or significant decline in value of collateral, failing to pay off interest-bearing debts, etc.Second,for professional institutions such as trustees, the guidelines have laid down specific requirements on the disclosure of duty performance such as verification of the written confirmation of periodical reports, verification of the use of raised funds, verification of resale, follow-up of disposal of bond default, etc.

Next, SZSE will stay true to the general principle of pursuing progress while ensuring stability and fully and faithfully apply the new development philosophy on all fronts. Upholding the top task of high-quality development, we will keep refining the system of regulatory rules on exchange-traded corporate bonds, continue to strengthen the training of relevant business rules, and put forth effort to improve regulatory capability and service standards. We will ensure that the responsibilities of market entities are fully fulfilled and work with relevant parties to promote the high-quality development of the bond market so as to better serve national strategies and overall economic and social development.