Bank of China and the Market Traders Association release "Notice on Improving Information Services Related to Credit Default Swaps in the Interbank Market"

On August 4th, the Bank of China's Interbank Market Trading Association issued a notice regarding the improvement of information services related to credit default swaps in the interbank market. It pointed out that quoting institutions should submit quotes on the NAFMII comprehensive platform from 8:30 to 16:30 on each quoting day, and they can choose to submit either indicative or reference quotes. Quoting institutions should provide bilateral quotes for the standard contracts of 36 specified entities listed on the NAFMII comprehensive platform, with quote durations of at least 6 months, 1 year, 2 years, and 3 years. The original text reads as follows: Notice on Improving Information Services Related to Credit Default Swaps in the Interbank Market CMA Issue [2025] No.149 To all participants in the credit risk mitigation tool business: In order to promote the development of credit risk mitigation tools in the interbank market and facilitate market price discovery, in accordance with the "Regulations on Credit Risk Mitigation Tools in the Interbank Market" (issued in Announcement [2025] No.8 by the Trading Association) and related self-regulatory rules, hereby notify the relevant matters to enhance the information services related to credit default swaps as follows. 1. The information service referred to in this notice is that the Bank of China's Interbank Market Trading Association (hereinafter referred to as the "Trading Association") provides comprehensive information services to market participants based on the transaction information and quoted information of credit risk mitigation tools. Transaction information refers to the transaction report information of credit default swaps and credit risk mitigation contracts that have actually been transacted. Quote information refers to the information formed by quoting institutions (hereinafter referred to as "quoting institutions") on the NAFMII comprehensive platform for the buying and selling bilateral quotes of specified standard credit default swaps contracts. 2. The Trading Association regularly provides market participants with statistical transaction information and, on the second working day after the transaction date of the credit default swaps and credit risk mitigation contracts, provides de-identified transaction information to quoting institutions. Quoting institutions should have access to the NAFMII comprehensive platform quote system permissions, submit the "Credit Default Swap Quoting Institution Information Registration Form," the "Credit Default Swap Quoting Reference Entity Application Form," and other materials required by the Trading Association, and ensure the authenticity, accuracy, and completeness of the submitted application materials. The Trading Association publishes the list of quoting institutions on its official website. 3. Quoting institutions have the following rights: (a) Convenient access to transaction and quote information. (b) Quote performance can serve as a reference for market evaluation in non-financial corporate debt financing tool underwriting businesses. (c) Priority participation in market innovation business such as derivatives. 4. Quoting institutions should accept self-regulation by the Trading Association and fulfill the following obligations: (a) Establish internal control mechanisms for quoting, clarify job responsibilities, operation processes, and authority management matters, ensure that job division and authority settings meet internal control and risk management needs. (b) Equip employees with corresponding professional ethics and capabilities, and reasonably set up incentive and constraint mechanisms for personnel. (c) Establish a complete quotation pricing mechanism, including pricing methods, pricing models, data sources, etc. Within one year of the implementation of this notice, submit credit default swap pricing methods to the Trading Association and gradually establish a credit derivative pricing system to carry out quoting. (d) Strengthen internal supervision throughout the quoting process, retain and archive quoting-related information, ensure the authenticity, accuracy, and completeness of information, do not fabricate, tamper with, or destroy business information, and the retention period of relevant information should not be less than 5 years. 5. Quoting institutions should quote for standard contracts that meet the "Credit Default Swap Quotation Standard Contract Element Table" and meet the following requirements: (a) Quoting institutions should submit quotes on the NAFMII comprehensive platform from 8:30 to 16:30 on each quoting day, and can choose to submit either indicative or reference quotes. An indicative quote refers to a quote displayed by the quoting institution on a trading platform recognized by the People's Bank of China, which market participants can use to determine the final contract elements and conclude transactions. A reference quote is a quote provided by quoting institutions solely for the purpose of generating a credit default swap quote curve. (b) Quoting institutions should provide bilateral quotes for the standard contracts of 36 specified entities listed on the NAFMII comprehensive platform, with quote durations of at least 6 months, 1 year, 2 years, and 3 years. (c) Quoting institutions should select at least 24 reference entities from the reference entity optional list published on the NAFMII comprehensive platform, and provide bilateral quotes for the standard contracts of the selected reference entities, with quote durations including but not limited to 6 months, 1 year, 2 years, and 3 years; if quoting institutions apply to add new reference entities, the quote durations should include but not be limited to 6 months, 1 year, 2 years, and 3 years. ...(the rest of the translation continues)