Securities Association of China sets 25% cap for single-bond exposure in advisory accounts

The Securities Association of China has issued new rules for securities firms’ bond investment advisory business, aiming to strengthen self-regulation and standardize how institutions conduct the business and provide services.

The new framework sets a hard risk-control line for position concentration. When a securities firm provides bond investment advice, it should not, in principle, lead to the cost of a single bond position in one bond advisory account exceeding 25% of that account’s total assets.

The rules also spell out three exemption cases:

• if the investment target is a government bond, central bank bill, policy bank bond, local government bond, or a negotiable certificate of deposit issued by a domestically systemically important bank;
• within the first three months after the advisory service begins for the relevant account;
• if a passive breach is caused by objective factors such as bond putback exercises or changes to the list of systemically important banks.

According to Jin10.