Core Viewpoint - The recent announcement by the China Interbank Market Dealers Association regarding the self-regulation of underwriting quotes in the interbank bond market aims to enhance the quality and stability of the bond market, addressing issues such as price wars and promoting a market-oriented pricing mechanism [1][2]. Group 1: Impact on Bond Market - The new regulations are expected to end the "price war" phenomenon in the bond market, encouraging a return to market-based pricing mechanisms [1][2]. - As of June, the interbank market accounted for 88.4% of the total bond market custody balance, highlighting its significance in China's bond market [1]. Group 2: Changes for Underwriting Institutions - The regulations will push underwriting institutions to restructure their profit models, promoting long-term and stable development [3]. - The current low underwriting fees have led to concerns about the quality of due diligence and compliance, potentially increasing default risks in the bond market [2][3]. Group 3: Financing for the Real Economy - By regulating underwriting quotes, the new rules are expected to broaden financing channels for the real economy, directing funds towards weaker sectors and key areas [4]. - The regulations aim to enhance the willingness of underwriting institutions to serve small and micro enterprises, as well as technology innovation companies, thereby improving market transparency and investor decision-making quality [4].

Core Viewpoint - The China Interbank Market Dealers Association issued a notice on June 16 to strengthen the norms for issuance and underwriting in the interbank bond market, emphasizing market-oriented principles and fair treatment of all investors [1][2]. Group 1: Issuance and Underwriting Regulations - Issuers and underwriting institutions must conduct issuance and underwriting according to market principles, ensuring fair treatment of all investors and prohibiting pre-agreed bond issuance rates [1]. - Underwriting institutions are prohibited from distorting market prices through "rebates" and must not engage in improper benefits through practices like holding bonds on behalf of others [1]. - Lead underwriters must protect investors' legitimate rights and cannot use underwriting as a means to attract clients [1]. Group 2: Balance Underwriting and Pricing - Balance underwriting must be conducted with fair pricing and compliance with procedures, adhering to the interest rates disclosed in issuance documents [1]. - Balance underwriting should not crowd out effective subscription sizes from investors, and the balance underwriting rate must not be lower than the upper limit of effective subscription rates [1]. Group 3: Compliance and Monitoring - Underwriting institutions are not allowed to quote below cost for underwriting fees when participating in bond project bidding [1]. - Issuers and underwriting institutions must fulfill payment obligations as per commercial agreements and cannot refuse or delay payments [1]. - Investors are prohibited from assisting issuers in "self-financing" and must not engage in insider trading, market manipulation, or other illegal activities [1]. Group 4: Self-Regulation and Enforcement - The Dealers Association will implement self-regulation in the interbank bond market, regularly monitoring issuance and underwriting activities and conducting market evaluations [2]. - Violations of self-regulatory rules and the notice will result in self-regulatory measures or penalties, and serious violations will be referred to relevant authorities for further action [2].

Core Viewpoint - The recent notice from the China Interbank Market Dealers Association aims to regulate the bond underwriting market by addressing issues such as distorted pricing, non-market-based issuance, and interference in the underwriting process, emphasizing that underwriting fees must not be quoted below cost [1][4][5]. Group 1: Regulatory Measures - The notice reiterates that underwriters must not quote fees below cost, requiring main underwriters to establish internal management systems for pricing and to assess project costs comprehensively [5][6]. - This is the second notice issued within a month regarding low underwriting fees, indicating a growing concern over practices such as low-price underwriting and potential collusion among market participants [6][7]. - The association has initiated self-regulatory investigations into firms that engaged in low-cost bidding, highlighting the need for stricter compliance and accountability [6][9]. Group 2: Pricing Mechanism and Underwriter Selection - The notice mandates that issuers and main underwriters adhere to market principles when determining pricing ranges, ensuring that these ranges reflect comparable bond rates or fair market prices [8]. - It limits the number of underwriters based on the issuance scale, allowing a maximum of two underwriters for short-term and ultra-short-term notes, three for issues between 2 billion and 5 billion, and four for issues above 5 billion [8]. - The notice also emphasizes the importance of maintaining a balance between underwriting and investor participation, ensuring that underwriting does not crowd out legitimate market demand [8]. Group 3: Complaint and Integrity Mechanism - The association plans to establish a complaint and integrity public disclosure mechanism to address violations of laws and self-regulatory rules during the issuance process [9]. - Complaints regarding interference in pricing, low-cost bidding, and other unethical practices will be documented and made public, promoting transparency and accountability in the bond market [9].

Core Viewpoint - The article discusses the ongoing efforts to regulate the underwriting and issuance processes in the interbank bond market, emphasizing the prohibition of underwriting fees below cost to combat unhealthy competition among underwriters [1][2]. Group 1: Regulatory Changes - On July 30, the China Interbank Market Dealers Association issued a notice to standardize the underwriting and issuance practices in the interbank bond market, specifically stating that "lead underwriters must not quote underwriting fees below cost" [1]. - This notice follows a previous directive in June aimed at strengthening the regulations on underwriting fees in the interbank bond market [2]. Group 2: Underwriting Fee Issues - A self-regulatory investigation was initiated against six lead underwriters for their low fee quotes in a bond project, with total underwriting service fees amounting to only 6,300 yuan [2]. - The reported fees for selected underwriters were alarmingly low, with some like China Galaxy Securities and Industrial Bank quoting estimated service fees as low as 700 yuan, raising concerns about the sustainability of such pricing practices [3]. Group 3: Market Practices - The article highlights ongoing issues in the interbank bond market, including low underwriting fees, bundled investments, and potential conflicts of interest, which have persisted despite previous regulations [4]. - The notice emphasizes the need for lead underwriters to comprehensively assess project costs and set reasonable quotes, while also encouraging early submission of subscription demands from investors [4]. Group 4: Pricing Mechanisms - The notice outlines that not only underwriting fees but also the pricing of book-building rates must be regulated, ensuring that the balance of underwriting does not crowd out effective investor subscriptions [5]. - It specifies that the interest rates should generally be determined at the upper limit of the book-building rate range [5]. Group 5: Disclosure and Distribution - The association has called for enhanced disclosure of information related to debt financing tools, particularly regarding lead underwriters' balance underwriting and self-investment, which must be disclosed in issuance announcements [6]. - There is a push to optimize the mechanism for lead underwriter syndicates during the registration and issuance phases of debt financing tools [6]. Group 6: Underwriter Selection Criteria - The notice imposes restrictions on the number of members in the underwriting syndicate based on the issuance scale, with specific limits set for different types of bonds [7]. - For short-term financing bonds, only up to two lead underwriters can be selected, while for larger issuances, the number can increase to a maximum of four [7]. Group 7: Future Regulations - The association has indicated that a dedicated management approach for underwriting quotes will be announced separately, signaling ongoing efforts to address competitive practices in the interbank bond market [8].

Core Viewpoint - The recent notice issued by the China Interbank Market Dealers Association aims to regulate the bond issuance market by addressing issues such as price distortion, risk mismatch, and resource imbalance, which have long plagued the industry [1][4]. Group 1: Market Competition and Practices - The bond issuance market is experiencing intense competition, leading to the widespread use of "rebates" as a hidden incentive among institutions to secure project resources and maintain client relationships [2][6]. - "Rebates" involve underwriting institutions providing economic compensation to investors or issuers during the bond issuance process to promote sales or obtain underwriting qualifications [2][6]. - Some leading underwriters have been reported to offer significantly low underwriting fees, even engaging in "loss-leading" practices to win bids for high-quality projects, which has forced smaller institutions to withdraw from the competition [3][5]. Group 2: Regulatory Measures - The notice clearly delineates regulatory boundaries, prohibiting price manipulation, low-cost underwriting, and other unethical practices, aiming to restore a fair competitive environment in the bond market [4][5]. - It emphasizes that both issuers and underwriters must adhere to commercial agreements regarding payment obligations, thereby curbing the practice of underbidding [5][6]. - The association plans to enhance self-regulation by establishing monitoring mechanisms and conducting regular evaluations of institutional behavior, with severe penalties for serious violations [5][6]. Group 3: Market Efficiency and Long-term Impact - The long-standing existence of "rebates" reflects a non-market-based incentive mechanism influenced by various factors, including the competitive landscape among issuers and underwriters [6][7]. - The notice is expected to guide underwriters back to a competition model focused on pricing and sales capabilities, reducing irrational low-cost underwriting behaviors and improving market pricing accuracy [8]. - As the issuance mechanism becomes more standardized, the financing environment for high-quality issuers is likely to improve, leading to enhanced market resource allocation efficiency [8].

Core Viewpoint - The recent notice issued by the China Interbank Market Dealers Association aims to address non-market behaviors in bond issuance, such as "self-financing" and "rebates," by reinforcing market principles and regulating the competitive landscape in the bond market [1][2]. Group 1: Background and Issues - The bond market has seen an increase in non-compliant behaviors, including low underwriting fees and rebates, which distort market pricing and harm fair competition [2][3]. - The association has identified that some issuers and intermediaries continue to engage in these practices despite increased regulatory scrutiny [1][2]. Group 2: Regulatory Measures - The notice outlines seven measures focusing on key issues such as low-price underwriting, rebates, and structured issuance, aiming to establish clear regulatory requirements [2][6]. - It emphasizes the need for fair competition in critical processes like bidding and pricing, and it further clarifies prohibitions against "self-financing" and "rebates" [2][6]. Group 3: Specific Violations - Examples of violations include issuers providing rebates to investors to achieve lower coupon rates and private funds charging additional fees disguised as "consulting service fees" [3][5]. - The notice also highlights the use of "代持" (proxy holding) as a method for issuers to circumvent regulations, allowing them to engage in self-financing practices [8]. Group 4: Enforcement and Compliance - The association has increased its enforcement actions, with 88 self-regulatory penalties issued in 2024, focusing on structured issuance and rebate violations [9][10]. - Institutions with poor compliance records may face severe consequences, including disqualification from business activities if they receive low ratings for consecutive years [10].

Core Viewpoint - The China Interbank Market Dealers Association has issued a notice to strengthen the regulation of bond issuance and underwriting practices in the interbank bond market, addressing issues such as low underwriting fees and unfair competition to promote healthy market development [1][2][4]. Group 1: Market Issues and Responses - The interbank bond market has faced intensified competition leading to problems like low-price underwriting, which distorts market prices and undermines fair competition [2][3]. - The notice aims to address these issues by establishing self-regulatory measures to enhance market discipline and improve the resilience and pricing capabilities of the bond market [2][4]. Group 2: Specific Prohibitions and Measures - The notice outlines seven key measures focusing on issues such as low-price underwriting, return fees, and self-financing practices, emphasizing the need for transparency and standardization in the issuance and underwriting process [3][4]. - It specifies the prohibition of self-financing and return fees, reflecting the evolving nature of these violations in recent years [3]. Group 3: Implications for Market Development - The implementation of the notice is expected to promote standardized practices in underwriting, maintain normal competitive order, and enhance the overall ecosystem of the bond issuance process [4]. - By reinforcing self-regulatory norms and clarifying the responsibilities of market participants, the notice aims to solidify the foundation for sustainable market development [4]. - The measures are designed to facilitate a more scientifically reasonable pricing mechanism, guiding resources to key areas and supporting the high-quality development of the real economy [4].

Core 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 and unfair competition, aiming to promote a healthy and high-quality development of the interbank bond market [1][2]. Group 1: Key Issues Addressed - The notification focuses on key issues including low-price underwriting, low-price underwriting guarantees, bundled investments, kickbacks, structured issuance, and overdue underwriting fees, providing clear regulatory requirements [2]. - It aims to rectify "involutionary" competition by establishing fair competition norms for bidding, underwriting, and pricing processes [2]. - The notification specifies prohibitions against self-financing and kickbacks, reflecting the evolution of related violations in recent years [2]. Group 2: Self-Regulation and Market Management - The Dealers Association will enhance self-regulation by monitoring underwriting activities, evaluating market participants, and addressing complaints, with potential disciplinary actions for violations [2]. - Issuers and underwriters are required to conduct their activities based on market principles, ensuring fair treatment of all investors and avoiding pre-agreed bond issuance rates or price distortions through kickbacks [2][3]. Group 3: Market Mechanisms and Development - The notification emphasizes the importance of establishing market-based constraints and a combination of government regulation and self-regulation to foster financial market development [4]. - It aims to promote standardized underwriting practices and maintain normal competitive order, thereby guiding the market towards fair competition [4]. - The measures are expected to enhance the pricing mechanism, leading to a more rational allocation of resources and better support for the real economy [4].

Core Viewpoint - The regulatory body emphasizes the need to rectify and standardize the bond issuance and underwriting process in the interbank bond market, addressing issues such as low underwriting fees and price manipulation [1][2]. Group 1: Regulatory Measures - The China Interbank Market Dealers Association issued a notification to strengthen the self-regulation of bond issuance and underwriting, responding to market concerns about low-price underwriting and other irregularities [1][2]. - The notification mandates that issuers and underwriters must conduct issuance and underwriting based on market principles, ensuring fair treatment of all investors and prohibiting pre-agreed bond issuance rates [2][3]. - Underwriters are required to ensure that their underwriting practices do not compromise investor rights and must quote fair prices for balance underwriting, which should not undercut effective subscription rates [2][3]. Group 2: Market Practices - The prevalence of low-price underwriting has distorted market pricing and led to a chaotic order in bond underwriting, with a focus on business development over compliance management [2][3]. - Some underwriters engage in low-price underwriting to secure more business opportunities, particularly with high-quality issuers, which can lead to conflicts of interest [5][6]. - The association has been monitoring the bond issuance and underwriting business regularly and has implemented self-discipline measures against violators [3][6]. Group 3: Evaluation and Support - The association has introduced a comprehensive evaluation system for underwriters, assessing their market coverage, business capability, and compliance, with results categorized into grades A, B, C, and D [3][4]. - Prominent underwriters such as CITIC Securities and Industrial and Commercial Bank of China have been recognized for their outstanding capabilities in the bond issuance process [4]. - The regulatory environment is shifting towards encouraging underwriters to enhance their operational capabilities rather than merely focusing on scale [6][7].

Core Viewpoint - The China Interbank Market Dealers Association has issued a notice to strengthen the regulation of bond issuance and underwriting practices in the interbank bond market, addressing issues such as low underwriting fees, price distortion, and improper benefits [1][2]. Group 1: Regulatory Measures - The notice outlines four main areas for regulating the behavior of issuers and underwriters, emphasizing market-based principles and fair treatment of all investors [2]. - Issuers and underwriters are prohibited from pre-agreeing on bond issuance rates and using "kickbacks" to distort market prices [2]. - Underwriters must ensure that underwriting fees are not quoted below cost and must fulfill payment obligations as per commercial agreements [2]. Group 2: Self-Regulation and Monitoring - The association will implement self-regulation in the interbank bond market, regularly monitoring issuance and underwriting activities, and will take disciplinary actions against violations [3]. - Violations of self-regulatory rules may lead to disciplinary measures, and serious legal violations will be referred to relevant authorities [3]. Group 3: Recent Disciplinary Actions - In 2024, the association imposed disciplinary actions on 88 instances involving 47 institutions and 41 individuals for minor violations, with ongoing investigations into several institutions suspected of non-market-based issuance [4]. - The association is particularly focused on violations in the primary issuance of bonds, including structured bond issuance and interference with issuance rates [4]. Group 4: Market Performance - As of June 16, 2024, a total of 87 commercial banks have underwritten bonds amounting to 69,897 billion yuan, with a significant increase in both the amount and number of bonds underwritten compared to the previous year [6][7]. - The underwriting amount has increased by approximately 8,868 billion yuan, representing a growth of 14.53%, while the number of bonds underwritten has risen by 4,249, marking a 29.19% increase [7]. - Major state-owned banks dominate the market, with China Bank leading at 7,224 billion yuan in underwriting, followed by Industrial and Commercial Bank and China Construction Bank [7]. Group 5: Impact of Regulatory Evaluation - Regulatory evaluations will directly affect banks' underwriting qualifications and market shares, with institutions rated D for two consecutive years facing disqualification from business [8].