In order to improve investor protection measures after the occurrence of several default events in the credit bond market, the National Association of Financial Market Institutional Investors issued the Model Investor Protection Clauses (Model Clauses 2016) in September 2016. Since then, with the further downward pressure on the economy and the government-led deleveraging process, defaults on credit bonds in the market have occurred frequently.

Model Clauses 2019 provides for six categories of investor protection clauses including cross-protection clauses, prior commitment clauses, prior binding clauses, change of control clauses, debt repayment guarantee clauses, and asset collateral clauses. Compared with Model Clauses 2016, the main changes in Model Clauses 2019 include the following:

Significance of the new model clauses. The introduction of Model Clauses 2019 released a positive signal from the National Association of Financial Market Institutional Investors to protect investors. If the corresponding investor protection clause can be added to the issuance documents of the debt financing instruments, the issuer’s operation, finance, investment and financing, etc., would be further regulated, and investors would be given multi-dimensional reinforced remedial measures to achieve more comprehensive investor protection.

In the context of establishment of "no implicit guarantee" and increasing default issuers in the fixed-income market, if investors pay more attention to, and actively participate and promote the design and setting of, investor protection clauses in the issuance documents of debt financing instruments, which are related to their rights and interest, include the asset pool in the repayment of debts, or distinguish the debt financing instruments with property security in terms of subscription volatility and cost acceptance, they can promote their debt financing instruments covered by asset pool or property security in terms of repayment, thereby enhancing the protection of their rights and interests.