Look-through Regulation : Theoretical and Practical View

Centered on studying the principle of look-through regulation, this article expounds the theoretical basis of look-through regulation and how it is applied in China, with a focus on analyzing the differences in look-through regulation between international and the Chinese bond markets. China’s look-through regulation requires investor identity verification as well as look-through of the funds, assets and fund flows of trading activities. When China’s bond market infrastructure was first conceived, system security and centralized look-through information was taken into its design, which was enabled by centralized registration of ownership, segregated accounts and direct holding. Compared to international practices, the direct holding system of China's bond market can better reflect the core characteristics of look-through regulation on a fundamental basis, i.e., increased market transparency and substance over form. China’s bond market infrastructure has been proactive in implementing look-through regulation. It offers timely, authentic and comprehensive information, and effectively lowers regulatory costs