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Transfer in Defaulted Bond on Maturity at CFETS Guidebook for Bond Connect Investors
This guidebook provides directions for the Transfer in Defaulted Bond on Maturity Service (“Service”), allowing investors registered with the Bond Connect Scheme (“Bond Connect Investors”) to trade defaulted bond on maturity in the China Interbank Bond Market. Bond Connect Investors who wish to participate should comply with the Rules for Transfer of Defaulted Bonds on Maturity in CIBM issued by CFETS and follow this guidebook for the procedures to service activation, trading, and settlement arrangements.

1. Service Activation
Bond Connect Investors can register for the Service by submitting to Bond Connect Company Limited (“BCCL”) the duly signed original copy of: -
·         Transfer in Defaulted Bond on Maturity at CFETS – Service Activation Form for Bond Connect (TDBM FORM 1); and
·         Risk Undertaking Letter to CFETS.

Upon the receipt of the documents, BCCL will provide feedback to Bond Connect Investors within two business days and confirm via email to those whose applications to activate the Service are successful.

2. Trading
Bond Connect Investors should submit the duly signed original copy of Contingency Transfer of Bond (Special Cash Bond) at CFETS – Application Form for Bond Connect (TDBM FORM 2) to BCCL no later than 4:00pm (Hong Kong time) of the working day preceding the expected trading day. Bond Connect Investors are advised to engage BCCL at an early stage so as to ensure the submission is of a valid order. CFETS or BCCL may request additional information from Bond Connect investors on a case by case basis.

Onshore market makers on the other hand should contact CFETS for order placement. On the condition that trade details are matched on the buy and sell sides for the defaulted bond on maturity, the trade will be executed on CFETS platform. BCCL will revert to Bond Connect Investors with a trade ticket generated by CFETS, the document that reflects a legally binding trade has been executed with regard to the defaulted bond on maturity.

3. Settlement
The Service supports settlement cycle of T+1 and T+2 only. Relevant custodian banks are required to submit a subscription form to CMU before the settlement date of the first transaction on defaulted bond settlement according to the CMU operating procedure on a one-off basis. Bond Connect Investors are highly recommended to direct their custodian banks to send settlement instructions to CMU as soon as possible after the trade is executed. Such settlement instructions should arrive at CMU no later than 11:00am (Hong Kong time) of the settlement day. In this connection, the CMU operating procedure of settlement recycling equally applies to defaulted bond settlement; Bond Connect Investors may contact their custodian banks for further detail.

4. Fee
CFETS charges investors a transaction-based fee at 0.00025% of the total amount, capped at RMB 1000 for each transaction. BCCL will provide Bond Connect Investors a bill of payment generated by CFETS on a quarterly basis for the total of such fees incurred during the quarter. Investors shall settle the bill directly with CFETS. BCCL takes no responsibility in facilitating or procuring the payment.

5. Contact Information
Submission to BCCL of TDBM FORM 1, TDBM FORM 2, and Risk Undertaking Letter to CFETS should be made to service@chinabondconnect.com.

For all other enquiries, please contact service@chinabondconnect.com / +852-23270732.


Note : This note of guidance is provided as a general guideline, and has no binding effect to CFETS or BCCL. CFETS and BCCL retain the right to change, modify or update this note of guidance.  Bond Connect Investors should beware that they are using the most updated version.


Download:
Annex I – Risk Undertaking Letter
Annex II – TDBM Form 1
Annex III – TDBM Form 2

Last updated on 23 February 2021