Notice on the Implementation of the Enhanced Arrangements of the Currency Conversion and FX Risk Management under the Bond Connect Scheme

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Publishing date: 2020-09-24 13:30:00

In order to improve arrangements of currency conversion and FX risk management underBond Connect scheme, China Foreign Exchange Trade System (“CFETS”) has improved arrangements for foreign institutional investors of Bond Connect Northbound Trading (“Bond Connect investors”) who participatein the Bank-to-Customer Market. The details are as follows:

 

I. Filing Requirements for Overseas Bank-to-Customer Market

Bond Connectinvestors specified within the scope ofInterim Measures No. 1 [2017]issued by the People’s Bank of China (PBC) may, after filing with CFETS by themselves or througha Hong Kong SAR Settlement Bank, directly trade with Hong Kong SAR Settlement Banks as their customers. Each Bond Connect investor canselect no more than three Hong Kong SAR settlement banks to conduct currency conversion and foreign exchange hedging services.

1. Filing Procedures

(1) Bond Connect investors shall, before conducting relevant businesses, appoint one Hong Kong SAR settlement bank as Primary Settlement Bank and other Hong Kong SAR settlement banks as General Settlement Banks. OnceBond Connect investors change their Hong Kong SAR settlement banks, theyshould file such change with CFETS within three business days.

(2) Bond Connect investors may, through bondholders, conductcurrency conversion and foreign exchangehedging services inPrimary Settlement Banks and General Settlement Banks.

(3) Each Bond Connect investor shall, through bondholders, open an RMB cash accountsinonly one Primary Settlement Bank for the specific purpose of RMB fund transfer and settlement under the Bond Connect Scheme.

 

2. Filing Materials

(1) Filing Form

Name and contact information of the selected Hong Kong SAR Settlement Bank(s);

Confirmation of the signing of derivatives agreement(s) with the Hong Kong SAR Settlement Bank(s) (if to conduct FX derivatives transactions).

(2) Other documents required by CFETS.

All aforementioned materials and completed forms should be stamped with the official seal or signed by an authorized signatory (attach the signature authorization).

II. Information Reporting

1. Reporting Entities

The Hong Kong SAR Settlement Banks thatparticipatein the overseas Bank-to-Customer Market under Bond Connect scheme shall fulfill reporting obligations.

2. Reporting Contents

The contents of reporting shall include: the trade date, the name of foreign investor, the name of bondholder(s), country/region of foreign investor, trading product, trading direction, amount, exchange rate, purpose/source, transaction type, among other information.

“Purpose/source” indicates whether or not the FX trade is conducted through Bond Connect; “transaction type” indicates whether the FX trade is an “initial transaction” or to “reversely closing position” or an “extension.”

3. Rules for Reporting

Reporting entities shall report the required information through the information reporting page on the CFETS Post-trade Processing Platformdaily. The reporting cut-off time is 12:00PM of the next trading day. All times refer to Beijing time (GMT+8).

 

III. Miscellaneous

1. Bond Connect investors should promptly inform Primary and General Hong Kong SAR Settlement Banks of their investment needs behind currency conversion and risk hedging transactions.

2. Primary and General Hong Kong SAR Settlement Banks shall perform duties of authenticity verification and monitoring based on the holding information regardingRMB/FX trading of Bond Connect investors.

 

IV. Contact Information

Filing Support: 400 978 7878 *1*2*1, 021-2316 5027

Business Support: 021-38585304, 021-23165164

Email: fx_mkt@chinamoney.com.cn

 

China Foreign Exchange Trade System

September 24, 2020

 

 

[Note]: In the event of conflicts, contradictions, imprecision, mistakes or omissions between the Chinese version and the English version, the Chinese version shall prevail as the only version of this Notice.

Disclaimer:

The English version is for your reference only. In case any discrepancy exists between the Chinese and the English version, the Chinese version shall prevail. CFETS shall not be liable for any losses, damages or any other liabilities suffered or incurred as a result of or in connection with such discrepancy.