In order to promote the credit risk mitigation tool (CRM) to play the role of credit risk dispersion and sharing, improve the product supporting mechanism, promote the fairness, transparency and efficiency of credit decisions, and meet the needs of current market development, February 23, The China Interbank Market Dealers Association (hereinafter referred to as the "Dealers Association") issued the "Rules on Decision of Credit Matters for Transactions of Credit Risk Mitigation Instruments in the China Interbank Market" (hereinafter referred to as the "Rules").

In recent years, with the successive defaults of domestic corporate credit bonds, some bond trading parties have disputes over whether the default situation and the definition of credit/succession event are suitable, and even resort to court or arbitration, resulting in low settlement efficiency, hedge failure and other problems. Market members called for the establishment of a market-based, fast and efficient credit decision mechanism. The dealers association organized the market members, based on the international experience based on the actual market on the basis of the "Regulations", in accordance with the idea of "market matters, market discussions, market decisions", the establishment of a "decision group collective review of independent voting + review experts for the final review of pending matters" two-tier discussion mechanism, to provide the market with CRM credit decision services.

In order to ensure the fairness of the decision of credit matters, the Rules follow the principles of objectivity, fairness, professionalism and transparency in the mechanism design: The first is the professional composition of the members. The decision group is composed of active and professional core traders and general traders in the CRM business, giving full consideration to the diversity of institutions. The review expert pool is composed of experts with relevant experience in the fields of law, accounting and finance. The second is the objectivity of the basis of the resolution, the resolution matters are mainly the type of connection with the Basic Terms and Rules, and the decision is based on public information; Third, the fairness of the resolution process is reflected in the setting of a clear time node in the resolution process, the random selection of experts participating in the reconsideration meeting, independent voting based on full discussion, and the resolution following the absolute majority rule. The fourth is the transparency of the process results, the timely public disclosure of the resolution process and results, the targeted publication of voting details for core traders and general traders, and the fairness of institutional voting is restricted.

The dealers Association said that in the next step, it will promote the formation of the first decision group and the reconsideration expert database in accordance with the "Regulations", and do a good job in the preparation of text convergence and application, promote the landing of the credit matters decision mechanism, and continue to promote the efficient and stable development of the credit risk mitigation tool market.

Responsible Editor: Yun Yang