By Wang Shen
The China Securities Depository and Clearing Corporation (CSDC) has collected comments on draft rules for the China Depositary Receipts (CDR) from market participants, as reported by the 21st Century Business Herald on Tuesday.
The publication of these detailed regulations indicates that the CDR have to take a further step towards the official practice.
The detailed regulations made provisions for the CDRs registration, depository, and clearing operations. Based on the market needs and related government deployments, the CSDC will gradually strengthen its support for relevant functions of the CDR's special corporate behaviors, cross-border conversion and so forth.
The detailed regulations stated that investors should use the A-share securities accounts to buy and trade CDRs. CDRs should be deposited in the CSDC when they are listed in the stock exchange. The CSDC will establish an electronic securities registration system based on the investors' accounts records.
All CDRs applicants, including CDRs custodians, holders or other applicants approved by the CSDC, should use the declaration system and the CSDC will have the right to examine and approve eligible applicants.
Also, CDRs custodians should submit the initial registration documents to the CSDC, complete the initial registration process within the scheduled time, and sign a service agreement with the CSDC before the initial registration.
The CSDC temporarily does not deal with the CDRs' pledged registration business but provides services of offering custodians the register of the CRDs holders, as well as information on registration and so forth.
The detailed regulations clarified that the CSDC would use the RMB as the settlement currency for CDRs and implement the classification system for the clearing process.
To trade CDRs, clearing participants should afford reserve settlement payments and securities clearing deposits.
These regulations also apply to the depositary receipt accounts issued in the overseas market as well as the registration and clearing of the underlying stocks.
