Announcement 2008 (No.12) (the “Announcement”) issued by the People’s Bank of China (PBOC) took effect on 1 August 2008.

The Announcement regulates matters concerning the delivery versus payment (DVP) settlement of bonds transactions in the inter-bank securities market and stipulates that participants should conduct their DVP settlement of bonds through the bonds custody account in the registration system. The Announcement also requires participants to establish a strong internal risk control mechanism and strengthen their administration of settlement funds and cash supply to effectively guard against settlement risks.

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