Decision of the China Banking Regulatory Commission on Amendments to the Tentative Procedures for the Administration of the Derivative Transactions of Financial Institutions
Decision of the China Banking Regulatory Commission on Amendments to the Tentative Procedures for the Administration of the Derivative Transactions of Financial Institutions
Decision of the China Banking Regulatory Commission on Amendments to the Tentative Procedures for the Administration of the Derivative Transactions of Financial Institutions
Order of the China Banking Regulatory Commission [2007] No. 10
July 3, 2007
The Decision of the China Banking Regulatory Commission on Amendments to the has been adopted at the 55th Chairman's meeting of the China Banking Regulatory Commission. It is hereby promulgated and shall go into effect as of the date of promulgation.
Chairman: Liu Mingkang
Attachment: Decision of the China Banking Regulatory Commission on Amending the Tentative Procedures for the Administration of the Derivative Transactions of Financial Institutions
The China Banking Regulatory Commission has been decided to make amendments to the Tentative Procedures for the Administration of the Derivative Transactions of Financial Institutions as follows:
Article 1 Item 2 of Article 5 shall be amended to read: "Financial institutions which acquired the qualification to conduct derivative transactions shall engage in business activities corresponding to itself risk management ability. Prior to engage in a complicated derivative transaction which is initially introduced to the domestic market, financial institutions shall submit relevant materials to the regulatory departments and consult the opinions from the regulatory departments in writing."
Article 2 Paragraph 6 of Item 1 in Article 7 shall be amended to read: "In the case where a foreign bank applies for approval to conduct derivative transactions, it shall be formally authorized by its parent bank (regional head office) and, its country of origin shall have a regulatory framework for derivative transactions and the regulatory authority of its country of origin shall have corresponding regulatory ability."
Item 2 of Article 7 shall be amended to read: "Where a branch of a foreign bank applies for approval to conduct derivative transactions, but does not meet the requirements as stipulated in Paragraph 1 through 5 of the preceding Items, its parent bank (regional head office) shall satisfy the above-mentioned requirements and it shall satisfy those stipulated in Paragraphs 6 and 7 as well as the following:
1. The formal authorization by its parent bank (regional head office) to the branch to conduct derivative transactions shall make specific regulations in terms of product range and quota;
2. Except when the parent bank has specific regulations to that effect, all of the derivative transactions of the Chinese branch shall be conducted via the parent bank (regional head office) in real time; the latter shall balance the transactions and carry out risk exposure and risk control management.
Article 3 Item 1 of Article 8 shall be divided into two items and become Item 1 and 2 respectively: "When a policy-oriented bank, Chinese-funded commercial bank (excluding city commercial banks, rural commercial banks, and rural cooperative banks) applies for approval to conduct derivative transactions, the legal person thereof shall uniformly file an application with the CBRC, and shall be subject to examination and approval thereof.
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