China Securities Depository and Clearing Co., Ltd. ("CSDC") has released the Circular on Measures Relating to Strengthening the Risk Control of Corporate Bond Repurchases (the "Circular").

It is provided that CSDC shall not accept new applications for corporate bond repurchase qualifications from the date of the Circular, and corporate bonds with repurchase qualifications are temporarily prohibited from being put in storage, except those corporate bonds with the highest rating of AAA and those issued by firms with the highest rating of AA and above (In the case of corporate bonds issued by firms with a rating of AA, their outlook for credit rating shall be positive or stable.)

Meanwhile, the Circular requires settlement participants to take the measures according to the relevant provisions, strictly restricting corporate bonds from being put into storage. Where corporate bonds are newly put in storage, CSDC will take compulsory measures to remove them from storage, and settlement participants shall strictly prevent risks in respect of inadequacy of pledged bonds or even overdraft risks.