State Administration of Foreign Exchange, Guidelines for Market Makers of the Interbank Foreign Exchange Market (Tentative)

Issued: November 24 2005
Effective: as of date of issue
Interpreting authority: State Administration of Foreign Exchange (SAFE)
Applicability: The term "market makers of the interbank foreign exchange market" refers to members of the interbank foreign exchange market verified by SAFE to bear the obligations of providing buying and selling prices to market members in the course of renminbi and foreign currency transactions carried out in the interbank foreign exchange market (Article 2).

Main contents: Designated foreign exchange banks complying with the conditions set forth in the Guidelines may apply for market makers of the interbank foreign exchange market with SAFE and, after the verification of SAFE, fulfil the obligations for market makers in accordance with the Guidelines. Article 3 of the Guidelines specify the qualification requirements for market makers of the interbank foreign exchange market, for example, (1) having been a member of the interbank foreign exchange market for at least two years, (2) the bank as a whole ranking among the top 30 in the size of renminbi and foreign currency transactions conducted in the interbank spot foreign exchange market for the previous half year, and (3) the bank as a whole having a capital adequacy rate reaching 8% or having foreign exchange capital of an equivalent of US$100 million or more for the preceding year. A market maker of the interbank foreign exchange market enjoys the rights of, among others, appropriately expanding the range of comprehensive positions in exchange sale and settlement and practising more flexible position management (Article 4). It also has obligations to, among others, continuously provide the dual buying and selling prices for trading of renminbi against main trading currencies (including the US dollar) in the interbank spot competitive bidding and price inquiry foreign exchange markets during the stipulated trading hours (Article 5).
Related legislation: PRC People's Bank of China Law (Revised), Dec 27 2003, CLP 2004 No.1 p.4; PRC Foreign Exchange Control Regulations (2nd Revision), Aug 5 2008, CLP 2008 No.8 p.77; Tentative Provisions for the Administration of the Interbank Foreign Exchange Market, 1996 and Circular on Issues Relevant to Accelerating the Development of the Foreign Exchange Market, Aug 8 2005, CLP 2005 No.7 p.6