‘As the November 30 deadline draws near, the probability of event risk rises, and it is entirely possible that stock and bond markets could meaningfully sell-off’
The CBRC enacted Circular 46, which accelerates enforcement procedures against prohibited accounting practices and requires that they be reversed by November 30.
Circular #56 (March 2016): Encouraging Free Market Resolution of NPLs. Asset Management Companies (AMCs), essentially China’s “bad” banks, are required to acquire NPLs at fair market value and are restricted from pre-setting prices with the selling banks.
Circular #82 (April 2016): Restricting NPL-Concealing Vehicles or Transfers. Banks are prohibited from warehousing NPLs through transfers of beneficial rights or assuming any explicit or implicit repurchase obligations in the sale of such assets to one another.
Circular #46 (April 2017): Accelerating Enforcement and Instituting Penalties for Infractions.
Banks have taken over US$325 billion in provision expenses in the past two years alone, meaning that NPLs are increasingly being marked-to-market to allow for sales.
Source: SCMP
http://www.scmp.com/business/china-busi ... compliance