BANK OF CHINA(SH:601988) Zhong Guo Jing Ying Bao·2025-06-21 19:32Core Viewpoint - The China Interbank Market Dealers Association has issued a notification to strengthen the regulation of bond issuance and underwriting practices, addressing issues such as low underwriting fees, collusion, and improper benefits [1][2][4]. Group 1: Regulatory Changes - The notification prohibits issuers and underwriters from pre-agreeing on bond issuance rates and using underwriting as a means to attract clients [1][2]. - Underwriters are required to quote fair rates and comply with the procedures outlined in issuance documents, ensuring that the underwriting rates do not undercut the effective subscription rates of investors [2][4]. - The notification emphasizes the need for banks to enhance internal management and establish barriers between underwriting and investment activities to prevent conflicts of interest [3][8]. Group 2: Market Impact - As of June 19, 2024, 87 commercial banks have underwritten a total of 71,615.52 billion yuan in various types of bonds, with a significant year-on-year increase in the number of bonds underwritten [3]. - The notification is expected to lead to a shift in banks' underwriting strategies, focusing more on project quality rather than quantity, which may temporarily reduce the scale of underwriting business [3][4]. - Long-term benefits include stabilizing underwriting fees and improving profit margins for banks, as well as enhancing the overall quality of underwriting practices [4][8]. Group 3: Compliance and Monitoring - The association will implement self-regulatory management and regularly monitor the bond issuance and underwriting business, with penalties for violations of the new rules [4][6]. - Recent statistics indicate a rise in self-regulatory actions, with 88 disciplinary measures taken against 47 institutions and 41 individuals for violations in 2024 [6]. - The association has highlighted the importance of proper fund supervision and has taken action against institutions that fail to fulfill their regulatory responsibilities [7]. Group 4: Recommendations for Improvement - Financial institutions are advised to establish robust internal control systems and enhance training for employees to improve compliance awareness [8]. - A scientific and reasonable bond pricing model should be developed, taking into account market supply and demand, credit risk, and term structure [8]. - Increased transparency through timely and accurate disclosure of bond issuance and underwriting information is recommended to reduce information asymmetry in the market [8].