Article 56 Where a securities firm carries out securities lending and borrowing but does not have sufficient funds or securities, it can borrow from the securities financial companies.

The deposit given by the customer, all the securities that have been purchased through securities lending and borrowing, and all the funds from the sales of securities are collaterals to the securities firm, and shall be deposit to the customer securities guarantee account or the customer funds guarantee account and credited to the customer s credit granting account.

The types of securities that can be lent to the customer by the securities firm and can be bought with the funds lent to the customer by the securities firm, the types and coefficient of the securities that can be used as deposit, the time limit for securities lending and borrowing, the minimum guarantee maintenance ratio and the time limit for making up the difference shall be determined by the stock exchange.

Article 50 A securities firm that carries out securities lending and borrowing business shall sign a securities lending and borrowing contract with the customer, and shall open a customer securities guarantee account with the securities registration and settlement organs, and a customer funds guarantee account with the designated commercial bank in the name of the securities firm in accordance with the provisions of the securities regulatory agency under the State Council.

3 Having professionals, technical conditions, funds and securities required for carrying out securities lending and borrowing business

Securities can be used as the deposit.

Article 51 A securities firm shall use its own funds or funds that have been raised according to the law when lending funds to the customer it shall use its own securities or securities whose right of disposal has been legally obtained by it when lending securities to the customer.

Article 31 If a securities firm is engaged in such businesses as securities assets management and capital and securities financing, it should develop reconciliation statement and send it to customers on monthly basis.

Article 49 A securities firm intending to start securities lending and borrowing business shall meet the following requirements

Article 61 The securities firm shall not provide financing or warranty to other people using the assets of the securities brokerage customers or securities assets management customers.

(2) Where any shareholder and actual holder of a securities firm force, incite, assist or accept the securities firm to provide financing or warranty with assets of stock brokerage clients or stock asset management clients

Article 29 The securities firm that is engaged in securities assets management business, capital and securities financing business, securities related finance product sales should get knowledge of identity, property, income status, securities investment experience and risk preference of customers according to prescribed procedure, and record as well as keep the information in written or electronic form.

Article 48 Securities lending and borrowing referred to in this article means that in the securities trading at the stock exchange or other securities trading places that have been approved by the State Council, securities firms lend capital or securities to customers for them to buy or sell securities based on the corresponding collaterals provided by the customers.

No units or individuals shall force, incite, assist or accept the securities firm to provide financing or warranty with the assets of the securities brokerage customers or securities assets management customers.

Article 20 If a securities firm has two or more kinds of securities brokerage business, securities assets management business, financing with capital and securities, securities underwriting, securities sponsors, its board should set up remuneration and nomination committee, auditing committee and risk control committee to perform rights prescribed in company regulation.

Article 30 Before the securities firm signs securities dealing entrustment, securities assets management, capital and securities financing contracts with customers, it should appoint specialist to introduce business rule and contract content to customers and let customer sign and confirm on risk disclosure letter.

Section 5 Securities Lending and Borrowing Business

Global Environmental Facility 182 661

The securities broker should have securities working qualification.

The production of a single automobile model, for example, or global trading in a financial instrument, may be physically dispersed across many countries.

This systemic risk a financial shock leading to severe economic contagion was supposed to be reduced by securitization. Financial globalization meant that banks no longer held assets like mortgages on their books, but packaged them in asset backed securities that were sold to investors in capital markets worldwide, thereby distributing risk more widely.

Foreign portfolio investment

(3) Where a securities firm does not report its security self operation accounts or portfolio accounts of its clients to a security exchange for file according to provisions

If the customer fails to make up the difference within the prescribed period, or fails to pay back the due debts of the securities lending and borrowing, the securities firm shall immediately dispose of its collaterals according to the agreement.

Real property, securities and wages are types of asset that are subject to an outright exclusion.

Article 5 By obeying national regulations, securities firms can issue, trade and sell securities financial products.

The assets custodian organs shall perform duties of safeguarding the customer s trust assets, handling the collection and payment of the funds and supervising the investment activities of the securities firm according to the provisions of the securities regulatory agency under the State Council and the securities assets management contract.

Global Environment Facility (GEF) resources needed to be increased, and the disbursement of GEF resources should be more flexible in order to enable more countries to benefit from the Facility.

Article 41 A securities firm engaged in securities business for its own account is limited to trading of legally issued stocks, bonds, warrants, securities investment funds or other securities recognized by the securities regulatory agency under the State Council.

It was noted that improving the ratings of debt issuance to investment grade by securitization and other mechanisms could lead to opening the door to large global pools of institutional investment.

Securities account opened by the securities firm for securities assets management customer should be submitted to stock exchange for filing within 3 trading days.

Article 76 A securities firm shall undertake real time monitoring on trading behaviors of its self operation accounts and portfolio management accounts.

The non monetary property amount shall not exceed 30 of registered capital of securities firms.

If a securities firm is engaged in securities assets management business, it should sign securities assets management contract with customers, defining investment scope, investment ratio, management period, management cost and so on.

(3) Where a securities firm, an asset management agency, a securities registration and clearing agency use trading settlement funds, trust funds and funds and securities in secured accounts of clients in violation of provisions

(4) Where the investment scopes or investment proportions of the security self operation business and portfolio management business of a securities firm are not conformed to provisions

As a result, by 2006, global liquidity amounted to more than twice the value of world GDP. Add to that the American financial sector s untenable subprime and securitization activities, and it is not surprising that the next two years brought the global financial system to the brink of outright collapse.

(IDB, GEF)

Source Global Development Finance, 1997.

The low costs of finance facilitated global investment, thereby contributing to the acceleration of global growth in 2004.

Article 44 If a securities firm is engaged in self run securities business, its risk controlling indicators such as ratio of total securities value and company net capital, ratio of value of one type of securities and net corporate capital, and ratio of quantity of one type of securities and total issuing quantity of this type of securities should comply with prescription of the securities regulatory agency under the State Council.

For example, the Global Committee of Argentine Bondholders has considered the initiation of international investment arbitration, following the Argentine Government's decision not to reopen the debt exchange for investors who have not tendered their bonds.

Article 80 Where a securities firm entices its clients to conduct unnecessary security trading or uses assets of its clients to take unnecessary security trading in its dealing with portfolio management business, it shall be punished according to the provisions prescribed in Article 210 of the Securities Law of the People s Republic of China.

(4) Deposit banks, designated commercial banks, asset management agencies, security exchanges, securities registration and clearing agencies of a securities firm

Except for circumstances prescribed in Article 54 of this Regulation or other agreements reached by the securities firm and customers according to law, the securities firm shall not use the securities or fund in the customer guarantee accounts.