ARTICLE 1 GENERAL PRINCIPALS
1.1 This rules are made on the basis of Market Interest Rate Pricing Self-regulation Mechanism Guidelines(hereafter the "Guidelines”), to stipulate mechanism of Loan Prime Rate (hereafter the “LPR”) formalization, announcement and supervision. 1111
1.2 LPR is a loan rate, which financial institutes offer to their best customers. Apart from LPR, financial institutes could adjust basis point from LPR by assessing borrower’s credit status, collateral, due time and the way of floating rate.
1.3 The best customer refers to non-financial institutes with low risk exposure and low operating and capital cost. Those institutes have a highest rating based on bank internal assessment.
1.4 LPR concentrated quoting and announcement mechanism refers to that the designated publisher calculates weighted-average rate to form and release the LPR on the basis of banks’ quoting independently. The other financial institutes could formulate their own loan prime rate by referencing LPR.
ARTICLE 2 CRITERIA TO QUALIFIED PANEL BANK
2.1 The LPR panel banks should meet the following criterion:
2.2.1 Meet requirements of restricted financial conditions and macro prudential policy framework.
2.2.2 Have highly systematical importance, foundation market impact and comprehensive strength.
2.2.3 Establish well internal yield curve and internal transfer pricing mechanism, having strong ability to price independently.
2.2.4 Set up LPR internal management rules, including internal management procedure, pricing mechanism and formula, and detailed pricing scheme.
2.2.5 Comply with other conditions in favor of LPR quoting.
2.3 Banks that satisfy above conditions and have willingness to be panel banks should submit the application and relevant materials to secretary before December 1st each year. The secretary would follow up the Guidelines to submit the application to Market Interest Rate Pricing Self-regulation Mechanism. Qualified quoting banks list for next year would be announced to market after deliberation.
ARTICLE 3 OBLIGATIONS OF PANEL BANKS
3.1 Panel banks should provide the LPR quotation. To ensure the quotation true and valid, the quotation would cover bank’s fund cost, credit risk, taxation, administration fee and the minimum capital return. Panel banks should submit quarterly report to secretary about LPR quotation and application.
3.2 Quotation must be sent through the quotation system offered by National Interbank Funding Center (NIFC) before 11:00 am. (Beijing time) every business day.
3.3 Panel banks must quote 1-year LPR. The product code is LPR1Y.
3.4 LPR is quoted on actual/360 day basis (%, T+0) with four decimals.
3.5 The panel banks must quote punctually and independently. Duplicated and manipulated pricing is not allowed. Panel banks should release daily LPR quotation on its own website.
3.6 Panel banks must establish mechanism for emergency to ensure the daily quotation on time.
ARTICLE 4OBLIGATIONS OF THE DESIGNATED PUBLISHER
4.1 NIFC is authorized as the LPR designated publisher.
4.2 Publiser is responsible to provide LPR quotation system. After receiving all the quotations, publisher calculates weighted average rate, excluding the highest and the lowest quotations.
4.3 LPR (2 decimal) will be published through Shibor website at 11:30 am every business day.
4.4 Publisher should monitor the quotations and give short notice if any abnormal. NIFC would calculate the LPR with available quotation if any bank does not provide quotation, meanwhile, publisher would report to the Market Interest Rate Pricing Self-regulation Mechanism in written form.
4.5 NIFC is responsible to maintain LPR system.
4.6 NIFC would establish back-up and emergency mechanism to ensure daily operation and historic data storage.
ARTICLE 5 Supervision
5.1 The Market Interest Rate Pricing Self-regulation Mechanism would adjust panel bank member list, supervise and manage LPR operation, monitor behavior of panel banks and designated publisher.
5.2 The secretary establishes the quotation assessment system, and the knockout system is introduced to panel bank assessment system. The secretary would review panel bank qualification annually, and submit new panel bank list each year to Market Interest Rate Pricing Self-regulation Mechanism. The list would be adopted after consideration of Mechanism.
5.3 The designated publisher would supervise the quotation from panel banks, and report the LPR operation to Market Interest Rate Pricing Self-regulation Mechanism monthly. For those panel banks who break the rules, publisher should give notice and report to the Market Interest Rate Pricing Self-regulation Mechanism.
5.4 This rule is revised and explained by secretary.
5.5 This rule is effective on announced day.