l  Latest Hot Spot

1.The 'Measures for Cybersecurity Review' (Revision Draft) Proposed that Companies with One Million User Data Shall Be Subject to Cybersecurity Review If They Plan IPO at Foreign Stock Market

2.NDRC Arranges Pilot Launch of Real Estate Investment Trusts in Infrastructure Facilities

l  New Law Express

1.The General Office of the Communist Party of China Central Committee and the General Office of the State Council issued the 'Opinions about Lawful and Severe Crackdown against Illegal Activities in the Securities Market'

2.The People's Bank of China released the 'Measures on the Administration of Bond Lending and Borrowing Business in the National Inter-Bank Bond Market (Exposure Draft)' to gather public opinions.

【Latest Hot Spot】

The 'Measures for Cybersecurity Review' (Revision Draft) Proposed that Companies with One Million User Data Shall Be Subject to Cybersecurity Review

 If They Plan IPO at Foreign Stock Market

The Cyberspace Administration of China recently released the Measures for Cybersecurity Review (Revision Draft), to gather public opinions until July 25, 2021. According to the draft regulation, if a business operator has collected personal information of more than one million users and it plans to go public in a foreign stock market, it shall apply for cybersecurity review to the cybersecurity review office.

According to the draft regulation, if the critical information infrastructure operators to procure network products and services, the data processors to carry out data processing activities that affect or may affect national security, shall be reviewed by the office of cybersecurity review.

According to the draft regulation, cybersecurity review focuses on the national security risks may brought by the procurement activities, data processing activities and foreign listings. The review mainly assessing whether by accessing such products or services will expose the critical information infrastructure to the risks of illegal control, interference or sabotage; expose the core data, crucial data or substantial amount of personal information to the risks of theft, leakage, destruction and illegal use or illegal export; expose the critical information infrastructure, the core data, crucial data or substantial amount of personal information the risk of foreign government influence, control, or malicious use.

In addition, according to the draft regulation, the cybersecurity review office will strengthen prior, intermediate and post-event supervision by various measures including accepting reports.

NDRC Arranges Pilot Launch of Real Estate Investment Trusts

in Infrastructure Facilities

The National Development and Reform Commission recently released a 'Notice on Further Work in the Field of Infrastructure Real Estate Investment Trusts (REITs) Pilot' (hereinafter referred to as 'the Notice'), requiring all Development and Reform Commission across the country to infrastructure REITs as a key task, actively promote, revitalize the stock of assets, and promote the formation of a virtuous cycle of investment.

The Notice requires all Development and Reform Commission across the country should explore their experience in development planning, investment management, project construction, etc., assure project reserves, strengthen coordination, help with problems accrued during the process, promote market cultivation, and fully mobilize the enthusiasm of all kinds of primary equity holders. Encourage the study and introduction of targeted support measures to promote the healthy development of the infrastructure REITs market, taking into account the actual situation in the region.

The Notice requires all divisions to strengthen the management of project reserves. Timely organize and summarize the infrastructure REITs pilot projects in the region, the eligible projects will be classified into the national infrastructure REITs pilot project database, so that all projects should be included. Other projects shall not declare participation in the pilot. Urge the relevant parties to update the project information in a timely manner, and dynamically grasp the progress of the banked projects, timely elimination of projects that do not meet the requirements, to effectively protect the quality of the banked projects.

The Notice requires that the intention to include the project bank projects, combined with the development needs and project situation, to promote the relevant preparatory work. Reserve projects, focus on the project progress, strengthen communication with the CSRC divisions, Shanghai and Shenzhen Stock Exchange, the relevant industry management departments, the relevant administrative approval departments, in accordance with the relevant procedures, to help implement the conditions for the issuance of infrastructure REITs.

The Notice proposed to maximize the usage of government investment guidance. Maximize the usage of social capital to participate in the revitalization of state-owned inventory assets within the central budget investment demonstration special, to support the recovery of funds invested in new projects to speed up the start of construction, to promote the formation of a virtuous cycle of investment. In the arrangement of the central budget investment, local government special bonds, the use of recycled funds into new projects, as well as in the revitalization of the stock of assets in the project unit to achieve positive results, can be given priority support under the same conditions, fully mobilize the revitalization of stock enthusiasm.

The Notice requires strict quality control of the project, standardize the preparation of materials, secure the quality of the project, as well as to improve the efficiency of reporting.

The Notice proposes three initiatives to promote the long-term healthy development of infrastructure REITs, including guiding the recovery of funds for the construction of new projects, promoting the stable operation of surviving projects, and strengthening the innovation of investment and financing mechanisms.

The Notice indicates that the original equity holders of projects in key areas are encouraged to use the infrastructure REITs model to carry out investment and financing innovations, open up reasonable exit channels for investment, form a closed loop of investment and financing, and promote the long-term healthy development of enterprises. Explore the actual situation in the region, strengthen the project and industry optimization and integration, and enhance the scale and quality of the original equity holders' assets. Deepen the reform of the investment and financing system, take multiple measures to attract social capital to participate in revitalizing the stock assets, and promote the construction of 'two new and one heavy' and short board projects.

【New Law Express】

The General Office of the Communist Party of China Central Committee and the General Office of the State Council issued the Opinions about Lawful and Severe Crackdown against Illegal Activities in the Securities Market

The General Office of the Communist Party of China Central Committee and the General Office of the State Council recently issued the Opinions about Lawful and Severe Crackdown against Illegal Activities in the Securities Market on July 6, stressing great efforts to punish serious crimes and toughen law enforcement actions in key areas. Showing the determination of cracking down the illegal activities in the securities market and promote the high-quality development of the capital market.

It specifies the targets in upgrading the securities law-enforcement and judicial systems by 2022 and 2025, including effectively curbing the frequent occurrence of major illegal and criminal cases, as well as making notable advances in the transparency, standardization and credibility in the securities law-enforcement and judicial system.

Efforts should be made to improve the securities legislation mechanism, while strengthening criminal punishment and market discipline, read the document.

In terms of law enforcement in cracking down on illegal securities activities, the document calls for improving the investigation, inspection, trial mechanisms, construction of trial bases, and local government’s responsibility.

The country would strictly and promptly investigate and deal with major criminal cases, and would significantly raise the violation cost in the capital market. Meanwhile, it would strengthen the unified law enforcement of the bond market and strengthen the legal liability for the illicit private equity fund.

The country should strengthen cross-border oversight of law-enforcement and judicial cooperation and step up efforts to build the credit system in the capital market, the document added.

The People's Bank of China released the 'Measures on the Administration of Bond Lending and Borrowing Business in the National Inter-Bank Bond Market (Exposure Draft)' to gather public opinions.

In order to regulate the bond lending and borrowing business in the interbank bond market (hereinafter referred to as 'bond lending'), protect the legitimate rights and interests of market participants and improve the liquidity of the bond market, the People's Bank of China (hereinafter referred to as “the central bank”) has revised the “Interim Provisions on the Management of Bond Lending and Borrowing Business in the National Interbank Bond Market” (hereinafter referred to as 'Interim Provisions') and drafted “Measures on the Administration of Bond Lending and Borrowing Business in the National Inter-Bank Bond Market” (hereinafter referred to as 'The draft regulation ').

In November 2006, the central bank issued the 'Interim Provisions' and formally launched the bilateral bond lending business, which met the needs of market participants for inventorying stock assets, closing settlement positions and hedging. With the development of China's bond market and the increase in the use of bond borrowing and lending by market participants, the 'Interim Provisions' no longer meet the market demand. Based on the demands of market members and the needs of financial market management, the he draft regulation draw on the practical experience of bond lending in mature markets to further improve the bond lending transaction system, enhance the liquidity of the bond market, strengthen risk prevention, and improve market regulation and soundness.

The draft regulation contains articles about performance collateral, principal agreement, collective bond lending and borrowing, and risk control. Firstly, the bond borrower should offer mutually agreed and sufficient performance collateral to the lender; secondly, participants of bond lending and borrowing business should sign a principal agreement recognized by the People's Bank of China; thirdly, participants can commission financial infrastructure institutions to conduct collective bond lending and borrowing; fourthly, market members should report and disclose large-sum bond borrowing and lending transactions and improve the risk monitoring system.

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