CDR related supporting rules are being urgently studied and formulated, which is expected to come out in two or three months.

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 CDR related supporting rules are being urgently studied and formulated, which is expected to come out in two or three months.


The issuance and transaction management of Depository Receipts (hereinafter referred to as the measures) is being consulted publicly. It is expected that the probability of landing in the second half of CDR is larger. At present, the detailed rules and regulations relating to the pricing and purchasing rules of CDR, the free exchange of basic securities, the mechanism of enterprise screening, and the protection of investors are being studied and formulated, and it is expected to be introduced in the next two or three months. CDR is expected to fall to the ground in the second half of the year Pan Xiangdong, the chief economist of the new age securities, said that the feedback deadline of the method was in June 3, 2018. With the further clarifying of some details, the CDR will be launched in the second half of this year, and it will be formally implemented. The industry believes that the CDR system policy direction is clear, reflecting the regulatory authorities to promote red chips enterprises to return to A shares determination and action. Shen Juan, chief analyst of the big financial industry of Huatai Securities Institute, said that CDR is an effective measure to solve the law and supervision of the two places. It is beneficial to the listed and overseas delisting enterprises to return to the A stock market. In comparison, CDR has obvious advantages in terms of time, procedure, and retaining the existing structure. From the perspective of enterprises themselves, the lower cost of issuing CDR and further widening of the original financing channels will help to enrich the diversity of ownership structure. CDR is an important measure for the capital market to serve the real economy and contributes to the transformation and upgrading of the economy. Wei Tao, President of the Pacific Securities Company and President of the Research Institute, said in an interview with the Chinese Securities newspaper reporter that the capital market will serve the new economy as an important train of thought for the current capital market reform. CDR has created a shortcut for the return of A shares on behalf of the industrial frontier unicorns and helps to supplement the fresh and dynamic enterprises for the capital market. It also provides strategic capital support for economic upgrading, supporting a number of emerging economies, and enhancing the potential for sustained and healthy economic development. Deng Lijun, chief of the Sichuan finance and securities strategy, said that the measures made strict regulations on the reduction of depository certificates, information disclosure and delisting and repurchase, and explained the measures for investment protection in detail. These regulatory measures will significantly reduce the impact of large listed red chip enterprises listed abroad on CDR stock returns to A stocks. In addition, from the threshold of CDR and the scope of trial, the impact of the return of red chip enterprises on the A share market is limited, and the unicorns in the new growth industry are most benefited. Detailed rules and regulations are to be issued Although the method has clearly defined the legal application and basic regulatory principles issued by the CDR, it has not yet made clear provisions in many details, and the relevant supporting policies need to be introduced. The method has not made a clear arrangement for the exchange of depository vouchers and basic securities, which are concerned by the market. It is only expressed as the conversion of depository vouchers and basic securities should be in accordance with the relevant state regulations. Shen Wan Hongyuan analyst Lin Jin believes that in the short term, the probability of full conversion between CDR and underlying securities is not large. With the current trend of promoting the opening of capital market in China, the future CDR conversion is expected to be liberalized, and at least the possibility of a convertible CDR with certain limits is more likely. At this stage, when the capital account is not fully liberalized, the CDRs base stock is more dependent on the issuance of new shares rather than stock issuance. Pan Xiangdong suggested that in the long run, we need to improve our foreign exchange management system, and gradually liberalize the capital account control so as to realize the marketization of exchange rate. In the future, the price transmission mechanism and free conversion mechanism of CDR and basic securities can be realized, so that the CDR function can be brought into full play. In addition, the CDR pricing and purchase rules need to be clarified. On the one hand, Pan Xiangdong said, on the one hand, overseas red chip enterprises or Unicorn enterprises can adopt market based pricing by issuing CDR regression, breaking the hidden constraints of 23 times the price earnings ratio of the domestic IPO, raising the efficiency of enterprise financing and improving the pricing efficiency of CDR. On the other hand, the probability of CDR issuance is very popular, but it needs to be vigilant about the investment risks caused by raising the price of the stock price to damage the investors interests before the issue of the issue and intensifying the market volatility. It is not clear how the Consultative Committee on scientific and technological innovation mentioned in the method has selected the eligible Unicorn enterprises. Therefore, we must establish a screening mechanism for market-oriented enterprises. Pan Xiangdong said that the specific pilot enterprise standards and the final Advisory Committee members and the audit decision mechanism need further clarifying relevant supporting policies by the SFC. Lin Jin believes that the formulation of the method not only pays attention to the connection arrangement with the securities law, but also provides the principles for the continuous supervision system. At the same time, it also refine the specific requirements for the follow-up related regulation. Securities Dealers actively prepare for war For depository institutions, Li Qian, assistant general manager of the East Jincheng financial business department, believes that the advantages of securities companies are obvious. The regulations stipulate that the issuance of depository vouchers should be underwritten by securities companies with securities underwriting qualifications, which makes them able to establish close business cooperation with customers, and the advantages of customer resources are obvious. In addition, the securities dealers are familiar with the operation of the securities market, and have strong service advantages. Especially, the securities dealers with branches abroad can better coordinate their customers in the two markets. The company has been paying close attention to the trend of CDR policy, and has conducted a number of thematic training and business analysis sessions. A large brokerage investment bank in Beijing told China Securities newspaper reporters that the industry is very welcome to CDRs landing. At present, the company has been actively laying out related business, and individual projects are also pushing forward. CDR has a relatively high demand for issuers, so it is expected that competition will be fierce. The positive preparation of securities companies from CDR will bring a lot of incremental revenue. According to Shen Wans strategic team, the initial financing scale of CDR is 170 billion, the size of single average financing is about 12 billion -250 billion, and the CDR underwriting premium rate is expected to be between 1.25%-1.50%. Wang Congyun, an analyst at Hongyuan, believes that the CDR issue mainly uses the way of adding basic securities, that is, the way of financing, so CDR issuance is an important increment for securities underwriting for securities companies in 2018. In addition, depository receipts can be traded on domestic stock exchanges, and they can also adopt market maker transactions in accordance with relevant regulations. Wang Congyun believes that securities companies engaged in CDR market making transactions to get price difference income is the core. Although short term transactions may still be dominated by free exchanges, it is the main direction for securities companies to make market for CDR transactions. Judging from the current situation, Li Qian believes that the main benefiting from the development of CDR business is the large leading securities companies. Such brokerages tend to have more mature overseas businesses and have stronger comprehensive strength to provide more comprehensive services for overseas listed Chinese enterprises. Other brokerages want to expand this business, need to speed up the layout of overseas branches, and strengthen the relevant business talent pool. The source of this article is China Securities Daily, the editor in charge of China Securities Network: Wang Fengzhi _NT2541 The positive preparation of securities companies from CDR will bring a lot of incremental revenue. According to Shen Wans strategic team, the initial financing scale of CDR is 170 billion, the size of single average financing is about 12 billion -250 billion, and the CDR underwriting premium rate is expected to be between 1.25%-1.50%. Wang Congyun, an analyst at Hongyuan, believes that the CDR issue mainly uses the way of adding basic securities, that is, the way of financing, so CDR issuance is an important increment for securities underwriting for securities companies in 2018. In addition, depository receipts can be traded on domestic stock exchanges, and they can also adopt market maker transactions in accordance with relevant regulations. Wang Congyun believes that securities companies engaged in CDR market making transactions to get price difference income is the core. Although short term transactions may still be dominated by free exchanges, it is the main direction for securities companies to make market for CDR transactions. Judging from the current situation, Li Qian believes that the main benefiting from the development of CDR business is the large leading securities companies. Such brokerages tend to have more mature overseas businesses and have stronger comprehensive strength to provide more comprehensive services for overseas listed Chinese enterprises. Other brokerages want to expand this business, need to speed up the layout of overseas branches, and strengthen the relevant business talent pool.