Regulators are aiming for better bond investor protection

Regulators will improve legal protections for bond investors and strive to reduce systemic default risks, a senior official with the China Securities Regulatory Commission said on Thursday.

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"We will urge bond issuers and underwriters to shoulder their obligations and responsibilities in case of a default, and we will also study an improved compensation system for investors," said Ouyang Zehua, director of the listed company supervision department of the CSRC.

He's also a deputy to the 12th National People's Congress, the top legislature, which is currently meeting in Beijing.

He was commenting on what is expected to be the nation's first onshore corporate bond default, which involves Shanghai Chaori Solar Energy Science & Technology Co.

The company said on Monday that it won't be able to make an interest payment of about 89.8 million yuan ($14.8 million) due on Friday on 1 billion yuan in five-year bonds that were issued two years ago.

As the company's bonds have a large retail investor base, it makes the case noteworthy.

Information about the default will be released according to developments in the case, and the CSRC has reminded investors to keep up to date with the situation.

"We will keep an eye on potential regional or even systemic financial risks," said Ouyang.

In Premier Li Keqiang's annual government report released on Wednesday, he stressed the principle that any sudden systemic crisis in the financial system should be prevented.

The CSRC official said Chaori Solar was a case in which market rules were being observed.