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Circular of China Foreign Exchange Trading Center and National Inter-bank Funding Center pertinent to the Promulgation of the Rules
for the Swap Transactions of RMB versus Foreign Exchange in Foreign Exchange Market of the National Inter-bank
Zhong Hui Jiao Fa [2006] No.118
All the members of inter-bank forward transactions of RMB versus foreign exchange,
In accordance with the Reply of State Administration of Foreign Exchange pertinent to the Promulgation of the Rules for the Swap Transactions
of RMB versus Foreign Exchange by China Foreign Exchange Trading Center (Hui Fa [2006] No. 87), the Rules for the Swap Transactions
of RMB versus Foreign Exchange in the National Inter-bank Foreign Exchange Market are hereby promulgated by China Foreign Exchange
Trading Center, please implement them accordingly.
Annex: Rules for the Swap Transactions of RMB versus Foreign Exchange in Foreign Exchange Market of the National Inter-bank
China Foreign Exchange Trading Center
National Inter-bank Funding Center
April 21, 2006
Annex:
Rules for the Swap Transactions of RMB versus Foreign Exchange in Foreign Exchange Market of the National Inter-bank
Chapter I General Provisions
Article 1
In order to regular the order of swap transactions of RMB versus foreign exchange in the national inter-bank foreign exchange market
and maintain the lawful rights and interests of the members of RMB/foreign exchange swap market (hereinafter referred to as the members),
these Trading Rules (hereinafter referred to as these Rules) are instituted in accordance with the Regulation of the People’s Republic
of China pertinent to Foreign Exchange Control, the Interim Provisions pertinent to Managing Inter-bank Foreign Exchange Market (Yin
Fa [1996] No.423), the Circular of the People’s Bank of China on Related Issues pertinent to Speeding up the Development of Foreign
Exchange Market and other related provisions.
Article 2
The “inter-bank swap transactions of RMB versus foreign exchange (hereinafter referred to as swap transactions)” mentioned in these
Rules refer to two exchanges between RMB and foreign currency on two different settlement dates and with the opposite direction that
are agreed on by both parties. On the first exchange of currency, one party uses foreign exchange to exchange RMB from the other
party at the stipulated exchange rate, and in the second exchange of currency, the latter party uses RMB to exchange the equivalent
foreign exchange of the same currency from the former party at another stipulated exchange rate; or vice versa. Of which, the exchange
on the former settlement date shall be enpost_titled as the close-to-carrier transaction and the exchange on the latter settlement date
shall be enpost_titled as the remote transaction.
Article 3
The membership management system shall be carried out in the national inter-bank foreign exchange market. Under the supervision of
the State Administration of Foreign Exchange (SAFE), Chinese Foreign Exchange Trading Center (hereinafter referred to as the “Trading
Center”) shall take charge of providing a trading system (hereinafter referred to as the trading system) for swap transactions between
the members.
Chapter II Management of Members
Article 4
The “members” mentioned in these Rules refer to the financial institutions or non-financial enterprises that have gotten the archival
filing qualifications of the SAFE for swap transactions for not less than six months and are carrying out swap transactions in the
Trading Center.
Article 5
Those traders who have gotten qualification certificates issued by the Trading Center shall not do swap transactions in the Trading
Center until they have taken part in the related professional trainings given by the Trading Center. A member shall appoint qualified
traders to do transactions on behalf thereof, and bear the responsibility for the transactions done by the traders.
Article 6
A member shall set up and improve an internal management system and a risk prevention mechanism, take practical and effective measures
to make monitoring and management on the swap risk, sign a Master Agreement concerning Forward and Swap Transactions of RMB versus
Foreign Exchange in the National Inter-bank Foreign Exchange Market (hereinafter referred to as the Master Agreement) and abide by
the laws, regulations and other related provisions concerning the inter-bank foreign exchange market.
Chapter III Trading System
Article 7
The inter-bank swap trading system is open to the market at 9:30 to 17:30 Beijing Time every week except Saturday and Sunday, and
is not open to the market on legal holidays of China. The trading time may be modulated in accordance with the alteration of market
demands after being reported to the SAFE by the Trading Center for archival filing.
Article 8
In case of force majeure, the Trading Center may, after reporting to the SAFE for archival filing, announce to suspend all or part
of the transactions. After the aforesaid factor is eliminated, the Trading Center shall immediately resume the trading and timely
notify the members.
Article 9
A trader shall comply with the related provisions concerning the trading system, and voluntarily maintain the market order. If in
violation of the provisions, any trader may be given a verbal warning by the Trading Center, circulated in a written report of criticism,
or even his qualification of traders may be cancelled in accordance with the circumstances. If the circumstances are serious, the
member shall take the responsibility.
Chapter IV Quotation and Transaction
Article 10
A member shall make quotations and do transactions by the trading system of the Trading Center.
Article 11
A swap transaction shall be carried out by using foreign currencies as the objects, and the market price of the inter-bank spot foreign
exchange market on the trading date recognized by both parties to the transaction shall be followed for the spot exchange rate referred
to calculate the transaction price or swap points.
Article 12
Both parties to a transaction shall negotiate with each other and determine the type of currency, amount, time limit, exchange rate,
transaction price (swap points) and settlement arrangement for the swap transaction, but the stipulations of both parties shall not
conflict with the related provisions in these Rules.
Article 13
After a swap transaction is entered into, the swap trading record (hereinafter referred to as the “trading record”) created by the
trading system shall be the certification that the swap transaction between both parties has been completed, and the trading record
shall go into effect after being confirmed by both parties in the trading system. Both parties to the transaction may, in accordance
with the requirements of actual situations, sign a supplementary agreement only suitable for them related to the breach of contract,
termination of the contract and the handling measures that have not been clarified in the Master Agreement. The trading record, supplementary
agreement (if any) and Master Agreement shall make up a complete swap transaction contract together. The clause in the Master Agreement
shall prevail if the stipulations between both parties to the transaction go against the applicable law article or dispute settlement
clause in the Master Agreement.
Chapter V Delivery and Settlement
Article 14
The capital delivery on the day of close-to-carrier settlement and on the day of remote settlement for a swap transaction may employ
the settlement method of delivery of total amount of principal or the balance settlement method. The RMB or foreign exchange capital
shall be paid to the capital account designated by the transaction opponent on the settlement day by both parties to the transaction.
Article 15
If the settlement day of a swap transaction is a statutory holiday of a currency issuing country or region, both parties shall negotiate
with each other and determine the date on which the capital to be actually delivered according to international practice.
Chapter VI Emergency Transactions and Cancellation Transactions
Article 16
Both parties to the transaction may make an emergency transaction if the swap trading system can’t transact in a normal way or create
trading records because of the trouble in its equipment or communications circuit,.
Article 17
An emergency transaction shall be a trading act under the operation of the Trading Center upon authorization of a member, and the
member shall be responsible for all the legal consequences for the transaction completed by the Trading Center on commission.
Article 18
The specific practice of an emergency transaction shall be:
If any member is unable to enter into the swap trading system, the Trading Center shall, after both parties to the transaction have
completed a transaction through negotiation, type the trading record standing for the member and fax the trading record to the number
designated by the member.
If any member has completed a transaction through the swap trading system, but the trading record is unable to be created, the Trading
Center may print the trading record for the member on commission, and fax it to the number designated by the member.
Article 19
For a swap transaction completed upon confirmation of the trading system of the Trading Center, if both parties to the transaction
agree to cancel it upon negotiation, both parties shall sign their names and give an explanation of the reasons for cancellation
on the trading record created in the trading system, which shall be under a valid seal of the trading department and/or shall be
signed by the chief trader, and both parties shall fax the aforesaid trading record to the number as designated by the Trading Center
and immediately call the persons designated by the Trading Center to notify and confirm. The Trading Center shall, upon receipt of
the faxes sent by both parties and upon finding no error after verification, cancel the aforesaid transaction in the trading system.
Article 20
Within 30 minutes before closing the quotation, the Trading Center shall not accept the applications for emergency transactions or
cancellation transactions submitted by the members in general.
Article 21
For the swap transactions that are cancelled upon request of the members, the Trading Center shall record down the request for cancellation
put forward by the initiator, and for the members that frequently cancel transactions, they shall be regularly publicized by the
Trading Center, and be taken into consideration when choosing excellent members through public appraisal.
Chapter VII Charges
Article 22
The Trading Center shall provide services of swap transactions to the members according to the principle of paid services.
Article 23
According to the Charging Scheme of the Inter-bank Foreign Exchange Market, the Trading Center shall charge the trading commissions
from both parties on a quarterly basis of 0.001% of close-to-carrier RMB amount of a swap transaction.
Article 24
According to the market conditions, the Trading Center may make a modulation on the charging rates for swap transactions after reporting
them to the SAFE for approval.
Chapter VIII Information Disclosure
Article 25
Upon authorization of the SAFE, the Trading Center shall take charge of routine statistics, market monitoring and related information
disclosure pertinent to sap transactions, and announce the market conditions pertinent to swap transactions and other supplementary
trading information to the members by means of the trading terminal.
Chapter IX Supplementary Provisions
Article 26
If any trading party try to gain unjustifiable purposes by malicious collusion or intentional breach of contract, or disturb the
foreign exchange market order by any unjustifiable means, it shall be announced by the Trading Center. If the circumstances are serious,
it shall be reported to the SAFE by the Trading Center, and the SAFF shall carry out a punishment of suspension or even revocation
of its membership qualification.
Article 27
If there is any dispute between both parties to a swap transaction, the original records pertinent to the related transaction may
be provided by the Trading Center upon request of one party or both parties.
Article 28
If any member fails to pay the commissions for swap transactions on time or illegally use the related information pertinent to swap
transactions provided by the Trading Center, and has not made corrections timely upon persuasion, it may be suspended its operational
power of doing swap transactions through the system terminal of the Trading Center by the Trading Center.
Article 29
The Trading Center shall be responsible for interpreting these Rules.
Article 30
These Rules shall go into effect as of the date of promulgation.
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