Core Points - The Ministry of Finance and the People's Bank of China issued a notification to strengthen cash management and risk control for commercial banks participating in treasury cash management [1][2] - The notification specifies that commercial banks can use government bonds, local government bonds, and policy financial bonds as collateral for treasury time deposits, with specific valuation percentages for each type of bond [1] - The notification emphasizes the importance of monitoring and controlling risks associated with treasury cash management deposits, particularly focusing on the operational risks and financial conditions of the participating banks [1] Summary by Category - **Collateral Management** - Commercial banks can use government bonds, local government bonds, and policy financial bonds as collateral for treasury time deposits [1] - The valuation for collateral is set at 105% for government bonds, 110% for local government bonds, and 110% for policy financial bonds [1] - Local government bonds can be pledged across regions without restrictions on the issuing entity [1] - **Risk Monitoring** - The Ministry of Finance and relevant departments will enhance risk monitoring and prevention for treasury cash management deposits [1] - Special attention will be given to the operational risks and financial health of the banks involved [1] - In case of significant safety risks or deteriorating financial conditions of a deposit bank, the Ministry of Finance may recover funds and release the corresponding bond collateral [1] - **Default Handling** - In the event of a default by a deposit bank, the situation will be handled according to the terms specified in the deposit agreement [2] - If the default is related to force majeure or external risk events, the Ministry of Finance will collaborate with the People's Bank of China to determine the appropriate resolution [2]

Core Points - The Ministry of Finance and the People's Bank of China issued a notification to strengthen the management of collateral for commercial bank deposits in treasury cash management [1][2] - The notification specifies the types of collateral that can be used, including government bonds, local government bonds, and policy financial bonds, with certain restrictions on partially repaid bonds [1] - The valuation and ratio for collateral are set at 105% for government bonds, 110% for local government bonds, and 110% for policy financial bonds, based on the amount of treasury deposits [1] Summary by Sections - **Notification Implementation**: The notification takes effect immediately and replaces the previous regulation from 2015. Existing pledges made under the old rules will not be adjusted [2] - **Collateral Management**: The notification aims to enhance risk control mechanisms and ensure the safety of treasury cash management funds by defining acceptable collateral types and their valuation [1][2] - **Future Adjustments**: The Ministry of Finance and the People's Bank of China will adjust the collateral types and ratios as needed based on changes in the bond market to ensure the safety of deposit funds [2]

Core Viewpoint - The notification aims to strengthen the management of collateral for time deposits in commercial banks participating in the national treasury cash management, enhancing performance guarantees and risk control mechanisms to ensure the safety of treasury cash management funds [3][4]. Group 1: Collateral Scope and Valuation - The collateral for time deposits in national treasury cash management can include book-entry government bonds, local government bonds, and policy financial bonds, with the stipulation that bonds with partial repayment cannot be used as collateral [3]. - Local government bonds are not restricted by the issuing entity and can be pledged across regions [3]. - The collateral is valued at face value, with government bonds, local government bonds, and policy financial bonds pledged at 105%, 110%, and 110% of the treasury time deposit amount, respectively [3][4]. Group 2: Pledge Operation Process - Commercial banks participating in the treasury cash management must follow the established operational procedures for pledging local government bonds or policy financial bonds, adhering to previous regulations issued by the Ministry of Finance and the People's Bank of China [4]. Group 3: Risk Monitoring and Default Handling - The finance department, in collaboration with relevant authorities, will enhance risk monitoring and prevention for commercial banks' time deposits, focusing on the operational risks and financial conditions of the deposit banks [4]. - In the event of a default, such as failure to repay principal and interest on time, the finance department has the authority to handle the situation according to the terms of the deposit agreement, including market-based disposal of pledged bonds if necessary [5]. - If the default is related to force majeure or external risk events, the finance department will negotiate with the People's Bank of China to determine the appropriate handling plan [6]. Group 4: Implementation and Adjustments - The notification is effective from the date of issuance, and the previous notification regarding the management of collateral for treasury time deposits is hereby abolished [6]. - The finance department and the People's Bank of China will adjust the range and ratio of collateral based on changes in the bond market to ensure the safety of deposit funds [6].

Core Points - The Ministry of Finance and the People's Bank of China issued a notification regarding the management of collateral for commercial bank time deposits in treasury cash management [1] - The notification specifies that collateral for time deposits will be valued at face value of bonds, with government bonds, local government bonds, and policy financial bonds being pledged at 105%, 110%, and 110% of the treasury time deposit amount respectively [1] - The operational procedures for pledging involve commercial banks using local government bonds or policy financial bonds, following the established guidelines for government bond pledges [1] Risk Monitoring and Control - The finance department, in collaboration with relevant authorities, will enhance risk monitoring and control for commercial bank time deposits in treasury cash management, focusing on the operational risks and financial conditions of the deposit banks [2] - In cases where a deposit bank faces significant safety risks or deteriorating operational conditions that affect the security of funds, the finance department may recover funds promptly and release the corresponding bond pledges after recovery [2]

Market Performance - Government bond futures closed higher across the board, with the 30-year main contract rising by 0.31%, the 10-year main contract up by 0.13%, the 5-year main contract increasing by 0.10%, and the 2-year main contract gaining 0.04% [1] - The yields on major interbank bonds generally declined, with the 10-year policy bank bond "25国开15" yield down by 2.25 basis points to 1.8975%, the 10-year government bond "25附息国债11" yield down by 1.9 basis points to 1.7610%, the 30-year government bond "25超长特别国债02" yield down by 2.6 basis points to 2.0490%, and the 20-year government bond "25超长特别国债04" yield down by 4 basis points to 2.13% [1] Funding Situation - The central bank announced a fixed-rate reverse repurchase operation of 418.5 billion yuan for 7 days on September 17, with an operation rate of 1.40%, and the total bid amount matching the amount allocated [2] - On the same day, 304 billion yuan of reverse repos matured, resulting in a net injection of 114.5 billion yuan [2] - The Ministry of Finance and the central bank conducted a tender for 2025 central treasury cash management deposits, with a total bid amount of 150 billion yuan and a bid rate of 1.78% [2] - The overnight repo weighted rate for deposit institutions rose to around 1.48%, while the quotes for non-bank institutions' pledged certificates and credit bonds also increased to around 1.6% [2] - As the peak of tax payment approaches its end, the funding situation is expected to ease [2] Operational Suggestions - The sentiment in the bond market has improved, supported by expectations of the central bank restarting bond purchases [3] - The bond market remains mixed, with uncertainties regarding market risk appetite, policies to expand domestic demand, and quarter-end institutional behaviors [3] - Without significant negative factors, the 10-year government bond yield may find resistance around 1.75%, while the T2512 contract is expected to fluctuate between 107.5 and 108.35 [3] - A cautious approach is recommended for investors, focusing on range trading in the short term [3]