· Forex market

· Forex trading
A.Organizational principle
The SAFE supervises the forex market; the open market operation office of the PBC is in charge of market macro-adjustments; and the CFETS organizes market operation.

B.Membership
The CFETS adopts a membership system. All financial institutions that have been approved by the PBC and their authorized branches to operate “forex sale and purchase” business can become a member of the CFETS.

C.Operation mode
The forex market adopts an electronic bidding system. The members can both quote on the local trading floor set up by the CFETS, or through trading terminals installed in the members’ dealing rooms. The trade system matches the quotations in priority of price and order. The members realize remote connection through DDN, F.R., or dialing.

D.Trading hours
The system is open from 9:30 to 15:30, Monday through Friday (holidays excluded).

E.Trading instruments
The system offers spot trading of RMB against the US dollar, Hong Kong dollar and Japanese Yen.

F.Formation of exchange rate
Opening, closing and weighted average prices are formed after every session of trading in the forex market. The weighted average price of USD/RMB is published by the PBC as the benchmark price for the next day, which acts as the listing price reference for banks.

G.Clearing
The CFETS handles clearing collectively for all trading members. The clearance of RMB goes through the clearing system owned by the PBC; foreign currencies are cleared through overseas clearing systems. The clearing speed is T+1.

· Foreign currency deposit brokering
A.Objectives
To improve the efficiency of forex fund operation of domestic financial institutions, as well as to promote the development of the domestic forex deposit market.

B.Target customer
Those financial institutions qualified for foreign currency deposit, which have signed the Agreement of Foreign Currency Deposit Brokering Service with the CFETS.

C.Operation mode
Financial institutions make inquiries and quotations to the CFETS through the electronic trading system, telephone, fax, etc. The CFETS then provides information on the foreign currency deposit market, helps the financial institutions to find counterparts, and facilitates the transaction.

D.Service hours
The system is open from 9:30 to 11:30 and from 13:30 to 16:30, Monday through Friday (holidays excluded).

E.Currency
USD, EUR, YEN, and HKD

F.Maturity
At present, maturities up to one year are available. The CFETS publishes the market situation of eight maturities: overnight, 7-day, 15-day, one-month, two-month, three-month, six-month and one-year.

G.Clearing
The two parties concerned carry out the clearing of funds themselves.

· Money market

· Interbank lending
A.Organizational principle
The PBC is the authority in charge of the interbank lending market. The CFETS organizes market operation and provides the computer trading system.

B.Operation mode
The interbank lending market gives quotations, standardized price inquires and confirms deals. As long as quotations are confirmed by the participants, the transaction notice will be automatically produced by the system as valid proof of the dealing.

C.Trading instruments
Trading parties can agree on any maturity of up to four months. The CFETS calculates and publishes the weighted average rate, named CHIBOR, for maturities of overnight, seven-day, 14-day, 21-day, one-month, two-month, three-month, nine-month and one-year.

D.Trading hours
The system is open from 9:00 to 11:00, and from 14:00 to 16:30, Monday through Friday (holidays excluded).

E.Membership
The participants include all the independent-identity commercial banks and their authorized branches, rural credit cooperatives, insurance companies, fund management companies and securities companies, and those foreign financial institutions that are approved by the PBC to handle RMB business in China.

F.Clearing
The trading parties perform bilateral clearing according to the transaction notice. Book transfers go through clearing system owned by the PBC. The clearing speed is T+0 or T+1.

· RMB voice brokering
In order to satisfy the multiple demands of various financial institutions, the CFETS introduced voice brokering in the money market. The CFETS, entrusted by financial institutions, seeks potential counterparts, provides market analysis, and facilitates the transaction of two parties through telephone, fax and the internet, etc.

A.Target customer
Those legal entity financial institutions qualified for market financing and their authorized branches that have signed the Agreement of Money Market Voice Brokering Service with the CFETS.

B.Service
To describe the financial market situation and provide relevant information; when entrusted, to give quotations, seek counterparts, make transactions and make inquiries, analyze the credit worthiness and create a financing plan.

C.Brokering scope
RMB interbank lending, bond repo, spot bond, bond distribution, paper business, and other businesses permitted by the development of the market and relative policies.

D.Service hours
The same as in the funding and bond market.