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Circular of the State Administration of Foreign Exchange on Adjusting the Administration on Synthetic Positions in the Settlement
and Sale of Foreign Exchange of Banks
Hui Fa [2006] No. 26
The branches and foreign exchange management departments under the State Administration of Foreign Exchange (SAFE) in all provinces,
autonomous regions, and municipalities directly under the Central Government, the branches in the cities of Shenzhen, Dalian, Qingdao,
Xiamen and Ningbo; all the policy banks, state-owned commercial banks, and joint stock commercial banks,
For the purpose of meeting the demand for the development of foreign exchange market, promoting designated foreign exchange banks
to perfect exchange rate risk prevention mechanism, the SAFE determines to adjust the policies for the administration of synthetic
positions in the settlement and sale of foreign exchange of designated foreign exchange banks, and hereby makes the following notice
concerning the relevant issues:
I.
From July 1, 2006, SAFE shall manage the synthetic positions in the settlement and sale of foreign exchange of designated foreign
exchange banks (hereinafter referred to as the banks) on the accrual basis.
II.
The principle of position administration on the accrual basis as mentioned in this Circular shall mean that a bank provides the business
of settlement and sale of foreign exchange to its clients, business of settlement and sale of foreign exchange of its own, and the
inter-bank foreign exchange market transactions reckoned into the synthetic positions in the settlement and sale at the day when
the transaction is concluded.
The principle of position administration on cash-basis accounting shall mean that a bank provides the business of settlement and sale
of foreign exchange to its clients, business of settlement and sale of foreign exchange of its own, and the inter-bank foreign exchange
market transaction reckoned into the synthetic positions in settlement and sale at the day when the capital is actually received
and paid.
III.
After the implementation of the principle of position administration on the accrual basis, in light of the actual situations of the
business of settlement and sale of foreign exchange of the bank itself and the inter-bank foreign exchange market transactions, and
according to the requirements of the statements in the Form of Daily Report on Synthetic Positions in the Settlement and Sale of
Foreign Exchange (See Annex II), a bank shall accurately calculate the synthetic positions of the settlement and sale of foreign
exchange of the bank itself, and submit the new Form of Daily Report on Synthetic Positions in the Settlement and Sale of Foreign
Exchange (See Annex I) to the SAFE or its branch administrations. The Form of Daily Report on Synthetic Positions in Settlement and
Sale of Foreign Exchange is annexed to the Notice of the State Administration of Foreign Exchange on Adjusting the Measures for the
Administration of Positions in the Settlement and Sale of Foreign Exchange of Banks (Hui Fa [2005] No.69, hereinafter referred to
as Hui Fa No.69) shall be abolished.
IV.
A bank shall submit the Form of Daily Report on Synthetic Positions in the Settlement and Sale of Foreign Exchange to SAFE and its
branch administrations according to the following requirements:
1.
The Form of Daily Report on Synthetic Positions in the Settlement and Sale of Foreign Exchange of the policy banks, national commercial
banks, and the market makers of the inter-bank foreign exchange market shall be reported to SAFE respectively by fax and email before
10 o’clock in the morning of the second work day (The electronic documents shall be made in the form of EXCEL). Fax: 01068402303;Email:
yinhangchu@mail.safe.gov.cn.
2.
The specific time and ways for submission of the Form of Daily Report on Synthetic Positions in the Settlement and Sale of Foreign
Exchange by urban commercial banks, rural commercial banks, rural cooperative financial institutions, and foreign-funded banks shall
follow the requirements of the branches of the SAFE at their localities.
V.
Adjustment shall be made on the Form of Information on Synthetic Positions in the Settlement and Sale of Foreign Exchange of Designated
Foreign Exchange Banks, which is submitted to the SAFE by each branch of SAFE (including foreign exchange management department,
the same hereinafter). Each branch of SAFE shall fill in the form and make a report according to the new design of the statements
(See Annex III) from the day when this Circular is implemented, and the ways and time for submission shall remain unchanged.
VI.
The limit of synthetic positions in the settlement and sale of foreign exchange of a bank, which is verified by SAFE or its branches
before the implementation of this Circular, shall continue to be effective. All banks shall do a good job for the administration
of the limit of synthetic positions in the settlement and sale of foreign exchange of their own banks according to the provisions
of the Document No.69 of SAFE. Except for the relevant matters subject to the adjustment of administration on synthetic positions
in the settlement and sale of foreign exchange, for other matters the Document No.69 of SAFE and the Notice of the Comprehensive
Department of State Administration of Foreign Exchange on Relevant Matters concerning Verification of the Limit of Synthetic Positions
in the Settlement and Sale of Foreign Exchange of Banks (Hui Zong Fa [2005] No.118) shall continue to be followed.
VII.
After receiving this Circular, each branch of SAFE shall forward it at once to the urban commercial banks, rural commercial banks,
rural cooperative financial institutions, and foreign-funded banks within its own jurisdiction.
If any problem is encountered in the implementation, please contact with the Department of International Balance of SAFE.
Contact Telephone: 010-68402385, 68402447.
Annex I: (_____Bank) the Form of Daily Report on Synthetic Positions in the Settlement and Sale of Foreign Exchange (omitted)
Annex II: the Explanation of the Form of Daily Report on Synthetic Positions in the Settlement and Sale of Foreign Exchange (omitted)
Annex III: the Form of Information on Synthetic Positions in the Settlement and Sale of Foreign Exchange of Designated Foreign Exchange
Banks (omitted)
State Administration of Foreign Exchange
June 2, 2006
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