I. Description
OTC book-entry bond (“OTC book-entry bond”) trading service is a book-entry bond investment and trading product at ICBC domestic outlets or via Electronic Banking.
OTC Bonds are book-entry bonds tradable with the approval of the People’s Bank of China at commercial banks and under custody of China Central Depository & Clearing Co., Ltd. and Interbank Market Clearing House Co., Ltd. Customers are not required to hold the certificate, but only open a custody account at the bond custody institution to record the holding. At present, the OTC book-entry bonds include treasury bond, local government bond, China Development Bank bond, policy bank bonds and newly issued bonds aiming at, among others, OTC business investors, all of which are recognized by the issuers (Please refer to the products actually offered by ICBC for detailed bond varieties).
The OTC transactions include spot bond trading and others recognized by the People’s Bank of China (Please refer to the types of transaction actually offered by ICBC for detailed types of transactions). It can be divided into continuous trading products and non-continuous trading products based on whether continuous trading is allowed. The trading varieties can be divided into continuous trading products and non-continuous trading products based on whether continuous trading is allowed. Continuous trading refers to that, within a natural week, except for holidays, the trading activities can continue during the trading hours starting from the designated start time in the first working day of the natural week through to the designated end time in the last working day of the week.
Refer to the announcements under “New Products” under the Bond channel on the official website (http://big5.icbc.com.cn) for the detailed types of bonds allowing continuous trading.
Further information on the bond category, issuance size and offering period will be announced by the issuers and ICBC through related media.
2. Target Customers
The product is applicable to corporate customers established in the territory of the People’s Republic of China (other than financial institutions), such as enterprises and institutions, state organs and social groups.
II. Functional Features
1. High security: so far, all OTC book-entry bonds are bonds with sovereign credit rating or quasi-sovereign credit rating, involving low credit risk.
2. Good returns: stable interest income can be obtained upon maturity; and spread income of trading can be obtained by seizing the favorable opportunities brought by market price fluctuations.
3. Sound liquidity: the customers can buy or sell the bonds at any time during the trading period, and real-time clearing of funds can be realized in the trading to meet the customers’ demand for fluidity.
4. Low threshold: both the threshold for a single transaction and the minimal increment unit are RMB100 face value.
III. ICBC Advantages
1. Rich variety of bonds: All book-entry treasury bonds covering all key terms are covered. ICBC is the first to issue China Development Bank Bond and China Export-Import Bank bond.
2. Competitive price: Supported by ICBC’s expert team and experience, ICBC can provide competitive prices to customers.
3. Long trading hours: ICBC has exclusively introduced the OTC continuous trading service, by which sale around the clock during the offering period is provided for all bonds, and continuous trading of products around the clock during the trading period is allowed.
4. Broad service channels: ICBC can provide account opening and transaction services to customers via multiple channels such as electronic banking (including internet banking and mobile banking) and outlets, and the business process is simple, fast and efficient.
5. Value-added services: The customer may conduct historical details inquiry and transfer of custody business; they can also apply for pledge loans taking the bonds as pledge.
IV. Price
The ICBC quotes to the customers with reference to the price trend of interbank bond market, the market liquidity and trading positions into comprehensive consideration, and has the right to adjust the trading quotations at any time according to the actual market situation. OTC book-entry bonds are traded at net price and cleared at full price.
V. Qualification
Corporate customers shall present the valid certification documents such as organization code certificate and the handlers’ valid identity documents as well in order to initiate the business at ICBC business outlets.
VI. Application Process
Corporate customers can go to ICBC business outlets to read through the Description of ICBC OTC Book-Entry Bond Products, undertake to abide by the Rules of ICBC for OTC Book-Entry Bond Transactions and sign the Protocol of ICBC for OTC Book-Entry Bond Transactions; after a customer has assigned the capital account for bond trading and paid the account fee for OTC book-entry bond, ICBC will open a custody account of OTC book-entry bond, and open the OTC book-entry bond business.
VII. Service Channels and Hours
i. Sign-up time
The actual business hours of outlet.
ii. Trading Hours
Trading hours of e-banking channels (applicable for subscription of issued bonds, subscription of rolled-over bonds, spot bond trading and bond custody transfer):
1. Subscription of issued/rolled-over bonds
From 10:00 on the start date to 16:30 on the closing date for bond issuance/rolling-over.
2. Spot bond trading/bond custody transfer
(1) Continuous trading products
Monday: 10:00-24:00;
Tuesday to Thursday: 00:00-24:00;
Friday: 00:00-16:30.
(2) Non-continuous trading products
Monday to Friday: 10:00-16:30.
Trading hours of business outlets: Monday to Friday: 10:00-16:30 (applicable for subscription of issued bonds, subscription of rolled-over bonds, spot bond trading, bond custody transfer, and non-transaction transfer of bonds).
In the case of national holidays, actual rest days as adjusted based on national regulations, trading suspending days as specified by regulatory agencies, or owing to unforeseeable, unavoidable and insurmountable force majeure events such as natural calamities and war, or under the effect of various international political, economic or emergent factors, or emergencies such as communications failure, system failure, power outages or trading suspension, or the factors such as financial crisis and changes of national policies, ICBC can suspend the trading of OTC book-entry bonds, and, where feasible, notify the customers in advance or in time, insofar as possible, via the channels such as the official website (http://big5.icbc.com.cn).
The customers can submit the applications for subscription of issued bonds, subscription of rolled-over bonds or spot bond trading via e-banking channels or business outlets, and fill in corresponding electronic instructions or vouchers as required so that the e-bank or business outlets can take actions accordingly.
VIII. Operation Guide
ii. Outlet counter
After a customer has opened a bond custody account at the counter, he shall carry his valid identity documents and corporate settlement account to an outlet designated by the Bank, and fill in a Bond Transaction Voucher to handle bond trading, bond custody transfer or other related businesses.
IX. Notes
OTC book-entry bonds can provide stable interest income to the investors; for the asset allocation-oriented customers hoping to obtain stable interest income from the bonds upon maturity, they can subscribe bonds during the bond issuance or rolling-over period, or buy bonds at the buying price for customers declared by ICBC after the bonds have been listed for transactions, and hold them until obtaining the interest income upon maturity.
OTC book-entry bonds can provide stable interest income to the investors; for the asset allocation-oriented customers hoping to obtain stable interest income from the bonds upon maturity, they can subscribe bonds during the bond issuance or rolling-over period, or buy bonds at the buying price for customers declared by ICBC after the bonds have been listed for transactions, and hold them until obtaining the interest income upon maturity. The price of OTC book-entry bond is closely related to the changes in bond market; for transaction-oriented customers with certain investment experience and risk-bearing capacity, on the premise of making accurate judgment, they can earn extra spread income by trading of OTC book-entry bonds. The bond price is inversely proportional to the market interest rates; the lower the interest rates are, the higher the bond price will be; and when the interest rates rise, the bond price will fall. Therefore, when the economy is developing rapidly and the sign of inflation appears, the market will predict the interest rates to rise, the customers can sell the bonds in hand to avoid the financial loss caused by falling of bond price following the rise in interest rates.
X. Market Information
The customers can obtain the market information related to OTC book-entry bonds through multiple channels such as the counters of business outlets designated by ICBC, ICBC’s official website (http://big5.icbc.com.cn), telephone banking (95588) and China bond information network (www.chinabond.com.cn).
XI. Risk Prompt
The trading of OTC book-entry bonds is confronted by various risks, including policy risk, credit risk, market risk, liquidity risk, operational risk, force majeure and emergency risk. Under the effect of various political and economic factors and emergencies both at home and abroad, the prices of OTC book-entry bonds are fluctuating at every moment, the customers should be fully aware of the risks possibly involved in the business, and volunteer to undertake the investment transaction risk caused by price fluctuation.
Note: The information given on this page is for reference only. See the announcements and rules of local outlets for details.
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