The People's Bank of China ("PBC") recently issued the Administrative Measures for Short-term Financing Bonds Issued by Securities Companies (the "Measures"), with effect on September 1, 2021.

The Measures stipulate that short-term financing bonds are subject to balance management, and the sum of the outstanding balance of short-term financing bonds and other short-term financing instruments of securities companies to be repaid shall not exceed 60% of the net capital. Other short-term financing instruments refer to financing instruments with a maturity of less than one year (inclusive), including inter-bank lending, short-term corporate bonds, etc. The Measures specify that the PBC implements macro management of short-term financing bonds issued by securities companies, and may adjust the maximum ratio of the balance of short-term financing bonds issued by securities companies to the net capital as well as the maximum term to maturity, based on the liquidity of the money market and the operation of the financial market. The Measures also indicate that securities companies may not use funds raised from the issuance of short-term financing bonds for fixed-asset investment, business outlets development, stock market investment or other purposes.

(Source: People's Bank of China)