Core Viewpoint - The interbank bond market in China has been experiencing irrational price wars among underwriters, leading to extremely low underwriting fees that disrupt market order. The China Interbank Market Dealers Association has issued new regulations to strengthen self-discipline in underwriting fee management [1][5]. Group 1: Market Conditions - Since last year, there has been a severe "involution" in the interbank bond market, with underwriters willing to accept losses to secure deals, resulting in frequent occurrences of "bargain prices" and "floor prices" [1]. - On July 17, a report highlighted that the underwriting fees for a 350 billion yuan bond project were as low as 700 yuan, with several major underwriters being investigated for abnormal pricing [3][4]. Group 2: Regulatory Actions - The China Interbank Market Dealers Association previously issued a notice on June 16 to address issues related to low underwriting fees and other unethical practices, emphasizing that underwriters should not quote fees below cost [4][5]. - On August 7, a new notice reiterated the need for underwriters to establish internal management systems for pricing and to ensure that underwriting costs cover all necessary expenses, including personnel, travel, and operational costs [5][6]. Group 3: Compliance and Reporting - Underwriters are required to report their underwriting costs to the association within ten working days after the annual financial report is disclosed, with specific guidelines on what costs should be included [5]. - The new regulations also encourage issuers to maintain fair competition and to set reasonable evaluation criteria for selecting underwriters, while increasing the penalties for violations of these self-discipline rules [5][6].

Core Viewpoint - The article discusses the recent notification issued by the China Interbank Market Dealers Association aimed at strengthening self-regulation in the bond underwriting market, particularly addressing the issue of "internal competition" among underwriters [2]. Group 1: Notification Details - The notification specifies that lead underwriters must accurately and reasonably calculate underwriting costs, covering all business process inputs and necessary expenses, including labor, travel, operational costs, and system development [2]. - It emphasizes that the cost calculation should encompass all branches and business functions, based on actual expenditures from the previous year [2]. Group 2: Issues in the Market - The article highlights a case involving Guangfa Bank, where six institutions won a bid for a total of 35 billion yuan in subordinated debt underwriting services with a total service fee of only 63,448 yuan, averaging just over 10,000 yuan per institution, resulting in an average underwriting fee rate of only 0.02 ‱ [3]. - The low bid of 700 yuan by some institutions raised concerns about covering basic costs, indicating a prevalent issue of underpricing in the market [3]. Group 3: Internal Management and Reporting - The notification requires lead underwriters to establish internal management systems for underwriting quotes and prohibits bidding below cost [4]. - Lead underwriters must report their underwriting costs to the association within ten working days after the annual financial report disclosure, with specific deadlines for 2024 data to be submitted by August 31, 2025 [4]. Group 4: Compliance and Enforcement - The association will conduct key inspections and interviews for any reported discrepancies in underwriting costs and will publicly disclose findings [5]. - There will be increased efforts to handle violations, including complaints against underwriters quoting below cost or interference from issuers in the pricing process [5].