Article 1 In accordance with the Law of the People's Republic of China on the People's Bank of China, the present Provisions are enacted with a view to regulating the market making business operated by national inter-bank market makers, improving market liquidity, perfecting the price discovery mechanism and promoting the rapid development of China's bond market.

Article 2 The term "market maker" as mentioned in the present Provisions means the financial institutions that conduct the market making business in the inter-bank market upon the approval of the People's Bank of China, enjoy the provisioned rights and assume the corresponding obligations.

Market making business means an act that a market maker, in accordance with the relevant requirements, consecutively makes bilateral quotations for the purchase and sale of the existing market making bonds in the inter-bank market, and then transacts with other market participants on the basis of its quotations.

Article 3 To be a market maker, a financial institution set up within the territory of the People's Republic of China in accordance with law shall meet the conditions as follows:

(1) Its registered capital or net capital shall be 1.2 billion yuan or more;

(2) It shall be active in the market and its trading amount of existing bonds for the previous year over application shall rank among top 80;

(3) It shall have tried to conduct the market making business in the inter-bank market and have possessed necessary experience and ability before it lodges an application;

(4) It shall own perfect interior control system, operation instruction and sound mechanism of interior risk control and incentive and examination mechanism;

(5) It shall own a considerably strong ability to study and analyze the bond market;

(6) There are five or more employees qualified for conducting bond business in the business department concerned, the posts are reasonably set and the duties are well clarified;

(7) It shall have no record of grave violation of any law or regulation in the recent two years prior to its application; and

(8) Other conditions as specified by the People's Bank of China.

Article 4 To be a market maker, a financial institution shall present the following materials to the People's Bank of China:

(1) An application form;

(2) Its Business License (copy of the duplicate);

(3) Its Finance License (copy of the duplicate);

(4) Its interior control system and operational instruction for the market making business;

(5) A brief introduction to the related business department (including personnel structure, post establishment, duty division and so on);

(6) A report on its activities in the inter-bank market in the recent two year prior to its application (including the summary of its try in market making business);

(7) The balance sheets, profit appropriation statements and cash flow statements (copies) of the recent two years before it submits the application which have been audited by certified public accountants;

(8) A written statement on the fact that it has no record of grave violation of any law or regulation in the recent two years prior to its application; and

(9) Other materials as requested by the People's Bank of China.

The financial institution shall hold responsibility for the authenticity, accuracy and integrity of the materials it presents and there shall be no false record, misleading statement or major omission.

Article 5 After receiving the application of a financial institution, the People's Bank of China shall carry out examination and approval according to the procedure as specified in the Measures for Implementing the Administrative Licensing by the People's Bank of China (Decree No.3 [2004] of the People's Bank of China).

Article 6 A market maker may be entitled to:

(1) Obtain the convenience to purchase bonds in the primary market;

(2) Have priority to become a member of the underwriting syndicates for the government bonds or the bonds of governmental development financial institutions, or a primary dealer for open market business;

(3) Have the advantage for making bond debit and credit;

(4) Enjoy the policy support in terms of making product innovation in the inter-bank market;

(5) As regards the transaction of existing bonds or bond debit and credit conducted through the market making business, enjoy preferences in commission charges for both transaction and settlement; and