Order of the People's Bank of China on the Issuance of the Tentative Measures for the Administration of the Operations of Foreign Exchange Purchase and Sale Conducted by Designated Foreign Exchange Banks

Order of the People's Bank of China on the Issuance of the Tentative Measures for the Administration of the Operations of Foreign Exchange Purchase and Sale Conducted by Designated Foreign Exchange Banks

Order of the People's Bank of China [2002] No.4

November 16, 2002

Tentative Measures for the Administration of the Operations of Foreign Exchange Purchase and Sale Conducted by Designated Foreign Exchange Banks was approved at the 39th official meeting held by the PBC on October 8, 2002. It is hereby announced to come into effect starting December 1, 2002.

Governor: Dai Xianglong

Attached: Tentative Measures for the Administration of the Operations of Foreign Exchange Purchase and Sale Conducted by Designated Foreign Exchange Banks

Chapter I General Provisions
　
Article 1 In accordance with the Administrative Regulations of the People's Republic of China on Foreign Exchange (hereinafter referred to as "regulations on the exchange system") and other related laws and regulations, these Measures are formulated for the purposes of regulating the operations of foreign exchange purchase and sale conducted by designated foreign exchange banks, clarifying the principles of the administration of self-satisfying foreign exchange purchase and sale, and ensuring the stable operation of the foreign exchange market.
　
Article 2 The PBC and its branches, as well as the State Administration of Foreign Exchange (SAFE) and its branches, are the administration agencies responsible for supervising the operations of foreign exchange purchase and sale conducted by designated foreign exchange banks. The PBC, together with SAFE, shall be in charge of granting and revoking foreign exchange purchase and sale operation licenses . SAFE shall be responsible for daily supervision over the operations of foreign exchange purchase and sale, prescription and adjustment of foreign exchange purchase and sale positions, and off-site inspections. On-site inspections shall be carried out by SAFE together with the PBC. SAFE is entitled to reject the applications of financial institutions for foreign exchange purchase and sale operations, and suspend or revoke the operation license of designated foreign exchange banks that have violated relevant regulations.
　
Article 3 The definitions of the terms in the Measures are as follows:
1. The term "designated foreign exchange banks" shall refer to financial institutions approved by the PBC to undertake foreign exchange purchase and sale operations, including both Chinese-capital financial institutions and foreign-capital financial institutions. The term "Chinese-capital financial institutions" shall refer to the policy banks, wholly state-owned commercial banks, joint stock commercial banks and their branches, city commercial banks, rural commercial banks, as well as other franchised financial institutions. The term "foreign-capital financial institutions" shall refer to foreign banks, branches of foreign banks, equity joint-venture banks, and other franchised financial institutions as stated in the Administrative Regulations of the People's Republic of China on Foreign-invested Financial Institutions.
2. The term "foreign exchange purchase and sale operations with clients" shall refer to the conversions between Renminbi and freely convertible currencies conducted by designated foreign exchange banks for their clients.
3. The term "self-satisfying foreign exchange purchase and sale operations" shall refer to the conversions between Renminbi and freely convertible currencies resulting from the demand of designated foreign exchange banks.
4. The term "foreign exchange purchase and sale positions" (hereinafter referred to as "positions") shall refer to funds prescribed by SAFE, held by designated foreign exchange banks, and specially used for foreign exchange purchase and sale, including the specific amount and stipulated floating range.
　
Article 4 In order to conduct foreign exchange purchase and sale operations, financial institutions shall apply to the PBC and obtain the designated foreign exchange bank license. Financial institutions which are not designated foreign exchange banks are prohibited to undertake foreign exchange purchase and sale operations.
　
Article 5 When undertaking self-satisfying foreign exchange purchase and sale operations and foreign exchange purchase and sale operations with clients, designated foreign exchange banks shall observe the provisions of the Measures and other relevant regulations concerning the administration of foreign exchange purchase and sale operations and separately control and prepare statistics for both kinds of operations.
　
Article 6 Designated foreign exchange banks shall abide by rules on positions administration, sell surplus positions in time through the inter-bank market, and shall not, without SAFE's approval, use the positions to cover self-satisfying foreign exchange purchase and sale under capita and financial account.
　
Article 7 Designated foreign exchange banks shall establish separate accounting items for foreign exchange purchase and sale operations, under which, foreign exchange purchase and sale operations with clients, self- satisfying foreign exchange purchase and sale operations, redistribution of positions with their own system, and "long" or "short" position settlement through the inter-bank market shall be booked separately.
　
Article 8 Designated foreign exchange banks shall establish a system for keeping all vouchers and bills related to foreign exchange purchase and sale operations, and separately keep for no less than 5 years related vouchers and bills for their foreign exchange purchase and sale operations with clients and self-satisfying foreign exchange purchase and sale operations.
　
Article 9 Designated foreign exchange banks shall correctly and hastily submit to SAFE foreign exchange purchase and sale data, and positions as well as other relevant statistical tables and materials as prescribed by SAFE in accordance with laws and regulations.
　
Article 10 A recording system shall be applied to large amount transactions of foreign exchange purchase and sale through designated foreign exchange banks.
　
Article 11 SAFE shall exercise an examination system in the form of exams, questionnaires, etc.
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