China Banking Regulatory Commission on the revision of the derivatives trading business of the interim measures for the administration of financial institutions decided
(January 5, 2011 China's Banking Regulatory Commission [2011] released 1th come into force on the date of promulgation), China Banking Regulatory Commission decides on the derivatives trading business of the interim measures for the administration of financial institutions as follows: One, the second is revised as follows: "banking institutions in these measures refers to the establishment of commercial banks, urban credit cooperatives, rural credit cooperatives and other financial institutions that take deposits from the public as well as policy banks. Legally-established financial asset management companies, trust companies, finance companies, financial leasing companies, as well as by the China Banking Regulatory Commission (hereinafter referred to as the China Banking Regulatory Commission) approved the establishment of other banking institutions in the derivatives business, these measures shall apply.
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Second, fourth, revised as follows: "this referred to derivatives trading business in accordance with the purposes of banking institutions are divided into two categories: (A) hedging derivatives trade. Banking financial institution initiative, in order to avoid its own assets, credit risk, market risk and liquidity risk and derivatives trading.
Such transactions subject to hedge accounting provisions, and into the bank account management. (B) non-hedging derivatives trading. With the exception of hedging derivatives trading outside of the class. Including by customer launched, banking financial institutions for meet customer needs provides of generation guest trading and banking financial institutions for hedge Qian said trading related risk and for of trading; banking financial institutions for bear do city obligations continued provides market buy, and sold bilateral price, and by its quotes and other market participants for of do City trading; and banking financial institutions active launched, using owned funds, according to on market trend of judge, to profit for purpose for of proprietary trading. Such transactions into trading account management.
” Third, fourth and fifth between articles: "customers in these measures refers to the individual except financial institutions clients and institutional clients. Banking financial institutions to sell financial products to customers if a derivative nature, the application of this approach to product design, trade, management, customer access and sales for the China Banking Regulatory Commission on the relevant provisions of the financial services. Risk of personal derivatives trading and sales links the application of relevant provisions of the personal finance business.
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Four, fifth is amended as: "opening derivatives trading business of banking institutions shall be approved by the China Banking Regulatory Commission, and accept the supervision and inspection of the China Banking Regulatory Commission. Eligibility for the derivatives trading business of banking institutions, should be engaged in its own risk management capabilities of business activity.
” Five, sixth revised as follows: "banking institutions involved in foreign exchange, commodities, energy and equity-related derivatives and derivatives transactions in the field should have the approval of the China Banking Regulatory Commission's derivatives trading business qualifications and comply with the Foreign Exchange Administration and other relevant regulations of the State.
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Six, between the sixth and seventh an article shall be added: "the initiation of dealings of derivative products eligible for banking financial institutions are divided into the following two categories:
(A) basic qualifications: only engaged in hedging derivatives trading;
(B) the General qualifications: in addition to basic qualifications may engage in derivative transactions can also engage in non-hedging derivatives trading. Under the banking risk management of financial institutions, regulators can its specific business model, product types implement differentiated qualification and management.
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Seven, seventh revised as follows: "banking institutions eligibility criteria for Foundation classes, subject to the following conditions:
(A) have sound derivatives trading risk management systems and internal control systems;
(Ii) has accept related derivative products trading skills specifically training half above, and engaged in derivative products or related trading 2 years above of trading personnel at least 2 name, related risk management personnel at least 1 name, risk model research personnel or risk analysis personnel at least 1 name, familiar sets period accounting operation program and system specification of personnel at least 1 name, above personnel are needed designed gang hand, mutual shall not who, and no bad records;
(C) appropriate trade premises and equipment;
(D) dealing with legal Affairs and professional departments responsible for internal control compliance checks and related professionals;
(E) meet the prudential requirements of the CBRC, China; (Vi) other conditions prescribed by the CBRC, China.
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VIII, seventh and eighth between articles: "eligibility criteria for General category of banking institutions, in addition to the above basic eligibility conditions also need to satisfy the following conditions:
(A) comprehensive derivatives trading, ago, automatically join the business, and the background processing system and real-time risk management systems;
(B) the derivatives trading business executives should have at least 5 years directly involved in derivatives trading activities or risk management experience, and has no adverse record;
(C) strict separation system, ensure that the business of hedging and non-hedging business marketing information, risk management, effective separation of profit and loss accounting;
(D) improvement of credit risk, market risk, operational risk, risk management framework; (V) other conditions prescribed by the CBRC, China.
” Ninth, eighth revised as follows: "foreign banks to engage in derivatives trading business, should be submitted to the CBRC local application materials signed by authorized signatory, after reviewing the agreement, China Banking Regulatory Commission for approval.
Foreign-funded banks, Sino-foreign joint venture Bank shall be centrally by the headquarters to the local banking regulatory Bureau to submit application materials; branch of a foreign bank in China more than two initiation of dealings of derivative products, should be determined by its management in China and doing submit application materials to local regulators, after reviewing the agreement, China Banking Regulatory Commission for approval.
Branches of foreign banks apply for derivative transactions should be from their headquarters (or regional headquarters) are duly authorized and their home country should have the legal framework to regulate the derivatives trading business, its home country supervisory authorities should have appropriate supervision. Application for initiation of dealings of derivative products branch of a foreign bank, without conditions in the Nineth or tenth, from their headquarters (or regional headquarters) subject to the above conditions.
While the branch should also meet the following conditions:
(A) from their headquarters (or regional headquarters) for the branch to engage in derivatives trading and other aspects of official authorized to trade and limits expressly provided;
(B) except as expressly provided in head office, all derivatives transactions of the branch through its mandate of Head Office (regional headquarters) disc system in real time, from their headquarters (or regional headquarters) unified disc, open management and risk control. The jurisdictional supervision of the banking and financial institutions are encouraged to submit application materials to local regulators, after reviewing the agreement, reported the CBRC approval; the other by the China Banking Regulatory Commission will directly monitor direct banking institutions submit application materials to the China Banking Regulatory Commission, China Banking Regulatory Commission for approval.
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Ten, IX is amended as: "the banking financial institutions apply for derivatives trading business, shall be filed with the China Banking Regulatory Commission or its agency, submit the following documents and information (one original and three copies):
(A) the initiation of dealings of derivative products application, feasibility study report and business proposal or business development plan;
(B) the derivatives trading business internal management rules and regulations;
(C) derivatives accounting system;
(D) managers and staff as the main trading and resumes;
(E) the derivatives trading risk management systems, including, but not limited to: exposure to quantitative rules or the authorized risk limit management system;
(Vi) trade premises, equipment and the security and stability of the test report;
(VII) other documents and materials required by the China Banking Regulatory Commission.
Branches of foreign banks to apply for opening derivatives trading business, when they do not have conditions in the Nineth or tenth, in addition to submitting their headquarters (or regional headquarters) the above documentation and information, should also be submitted to the local banking regulatory Bureau the following files:
(A) from their headquarters (or regional headquarters) for the branch to engage in derivatives transactions and limits of formal written authorization; (B) except as expressly provided in its head office, from their headquarters (or regional headquarters) issued to ensure that all derivatives trading by the Head Office of the branch (regional headquarters) flat trading systems in real time, from their headquarters (or regional headquarters) for flat plate, open management and risk control of the commitment letter.
” Third, 11th modified to: "banking institutions submitted in accordance with these rules of trade premises, equipment and system security testing report, in principle, should be made by independent third parties.
” 12, the 12th increase as the second: "approval system for new services, products and processes.
” 13, 13th revised to read: "China Banking Regulatory Commission receipt of banking institutions under this approach submitted a complete reply within three months from the date of application.
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14, 15th is amended as: "the banking financial institutions shall, in accordance with the institution's business objectives, capital strength, management capability and risk characteristics of the derivatives to determine whether suitable for derivatives trading and suitable for derivatives trading, variety and size.
Banking institutions to engage in derivatives trading business, developing new business, to explore new markets and so on before the innovation, shall consult in writing regulators. Banking institutions should gradually improve capability of independent innovation, trade management and risk management, and care involved in itself does not have the pricing power of derivatives trading. Banking financial institutions shall not own or sell to customers might appear infinite loss of naked short selling derivatives and based on assets or derivatives linked to indexes of derivative products.
” XV, and 16th article modified for: "banking financial institutions should according to fourth article by column derivative products trading business of classification, established and by engaged in of derivative products trading business nature, and scale and complex degree phase adapted of, and perfect of, and reliable of market risk, and credit risk, and operation risk and legal collection rules risk management system, and internal control system and business processing system, and equipped with perform above risk management, and internal control and business processing duties by need of has related business knowledge and skills of staff.
” 16, 17th revised as follows: "banking institutions Board of directors or its authorized Professional Committee shall regularly on existing derivatives business case evaluation, risk management policies and procedures, ensure that it is consistent with the institution's capital strength and management level. New product launches frequently or when significant changes in the system, there should be a corresponding increase in frequency of assessments.
” 17, and 18th article and 19th article Zhijian increased a article: "banking financial institutions senior management personnel should understand by engaged in of derivative products trading risk; audit assessment and approved derivative products trading business business and risk management of principles, and program, and organization, and permission of integrated management framework; and can through independent of risk management sector and perfect of check report system, at any time gets about derivative products trading risk status of information, for corresponding of supervision and guide. On this basis, banking institutions should be an annual assessment of its derivatives business, and last year two copies of the assessment reports submitted to regulators before the end of January each year.
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18, 19th, 21st and 29th merged article is revised as follows: "banking institutions on the basis of the Agency's overall strength, own capital, profitability, business policy, derivatives trading and prediction of market choice and adapted to the Agency's business calculation of derivatives exposure indicators and methods.
Banking institutions should establish and strictly enforce the system of authorization and stop, establish and periodically review and update various types of derivatives trading risk exposure limits, stop loss limits, emergency plans and stress testing of the systems and indicators, quota monitoring and limitation procedures developed. When trading in derivatives must strictly adhere to proper authority and exposure to risk management systems, any major transactions or new derivative products business should be by the Board of directors or its authorized Committee or senior management approval.
In the book occurred due to changes in market or mistakes in decision-making when the deficit should be strictly enforced stop-loss system. Deal activity has acted ultra vires or irregularities of the traders and their supervisor, strict accountability and punishment.
” Between articles 19, 19th and 20th an article shall be added: "the banking institutions should be strengthened to branch authorization of derivatives trading business. Derivatives management ability, risk prevention and management level of the lower branches, shall be received on its derivatives trading privileges. Banking institutions should be specified in the corresponding risk management systems category features of major trading risk, and rescind the permission procedures. Branches of the major derivatives trading risk, should cancel its derivatives trading privileges.
” 20, 20th is amended as: "the banking financial institutions for risk measurement, monitoring and control of staff must be separately from persons involved in derivative transactions or marketing shall not be concurrently with each other; risk measurement, monitoring or control personnel can report directly to the senior management risk profile. Under this approach the classification standards set fourth in article, banking institutions are responsible for engaging in hedging and non-hedging derivatives trading personnel shall not concurrently serve as. Banking institutions should ensure that the above information about the different types of derivatives transactions separate from each other.
” 21, 23rd revised as follows: "the banking financial institutions should develop policy on assess the appropriateness of the counterparty: include assessing whether the counterparty to fully understand the terms of the contract and the fulfilment of contractual obligations, identify whether the derivative transactions to be carried out in accordance with purpose of counterparty itself to engage in derivative transactions. At the time of fulfilment of the requirements of this article, banking institutions according to the principle of honesty and credit reasonably relied on the formal written document provided by the counterparty.
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22, 24th is amended as: "the banking institutions should be based on clear, terse words to provide derivative products and risk disclosure of written information and related disclosures presented in separate chapters, see clear way, not to page edges, bottom of page, footnote or small font description, including but not limited to:
(A) the structure and basic trading terms of the presentations and the full legal text of the product;
(B) index, link with the product return instructions or other parameters;
(C) the main risk associated with the transaction disclosure;
(D) the cash-flow analysis, stress testing, and some assumptions and confidence the worst possible scenarios analysis and maximum cash flow losses and the rationality analysis of hypothesis and confidence; (E) should be fully revealed to the customer for additional information.
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23, 25th is amended as: "the banking financial institutions should develop comprehensive counterparty credit risk management system, selecting the appropriate methods and models to assess counterparty credit risk and to take appropriate risk mitigation measures. Banking institutions should be based on appropriate ways to express to a counterparty credit risk mitigation measures related to the potential impact on the.
” 24, 26th, and 27th between three: "banking institutions engaged in hedging derivatives trading shall be conducted by asset and liability management department according to the real needs of this body decided to launch trading and deal-making.
” "Banking institutions to engage in non-hedging derivatives trading, exposure to market risk capital provision should be made for trading, market risk capital calculation method in accordance with the capital adequacy ratio management of commercial bank and the commercial bank market risk capital within the relevant provisions of the model law Guide.
” "Banking institutions to engage in non-hedging derivatives trading, which under the law of the market risk capital shall not exceed 3% of the core capital of banking institutions. Regulators can be based on the business of banking institutions in the capital-ratio requirements within the dynamic management. Standards under the law of the market risk capital is calculated in accordance with the relevant provisions of the commercial banks ' capital adequacy ratio management approach implementation.
” 25, 27th revised to read: "the banking institutions should be based on the size of derivatives trading with categories, establish a sound liquidity risk monitoring and early-warning systems, adequate liquidity arrangements, ensure that abnormal market conditions, have sufficient ability to perform.
” Merge changed to article 26, 28th and 37th "banking institutions should establish a sound risk control mechanism and system, clear derivatives trading operations and monitoring responsibilities, including, but not limited to: transaction files generated entry, trade confirmations, and net delivery, the market value of transactions reviewed, revaluation, exception reporting, accounting, and so on. Derivatives trading process files and sound recordings should be unified into the file system management and function checked regularly.
” 27, 28th and 29th between two: "the banking financial institutions shall, according to the China Banking Regulatory Commission will provide for clearing of derivatives trading to ensure compliance with delivery responsibilities, specification of default and termination event, prompt recognition and control operational risk.
” "The banking financial institutions should establish a sound management information system for derivatives trading, according to product, classification of counterparties, such as complete and effective management information.
” 28, between 32nd and 33rd an article shall be added: "the banking institutions should be developed for derivatives contracts and other relevant legal texts of assessment and management systems at least once a year according to the counterparty, derivatives trading on involves the contract effectiveness, assess the effect of the text, understand and master, and effectively guard against legal risks.
” 29, 34th is amended as: "the internal audit Department of banking institutions to derivatives trading risk management systems on a regular basis on the implementation of inspections.
For the derivatives trading system and operational internal audit should have the following elements:
(A) ensure that a sufficient number of internal audit staff with relevant experience and skill; (B) establish the internal audit department's independent reporting line to the Board.
” 30, 35th is amended as: "the China Banking Regulatory Commission can check for derivatives trading operations of banking institutions of information and reports, risk management systems, internal control systems and business process system is compatible with the kinds of dealings of derivative products.
” 31, and 38th article modified for: "banking financial institutions of derivative products trading personnel (including competent, and risk management personnel, and Analysis Division, and trading personnel,), and institutions violation this approach of about provides violations operation, caused this institutions or customer major loss of, the banking financial institutions should on directly is responsible for of senior management personnel, and competent personnel and directly responsibility people give demerit until fired of disciplinary; constitute crime of, transfer judicial organ law held criminal.
” 32, 39th is amended as: "the banking institution unauthorized initiation of dealings of derivative products, according to the People's Republic of China banking regulatory act for punishment.
” 33, 40th is amended as: "banking institutions are not in accordance with these measures or requirements of China Banking Regulatory Commission to submit relevant reports, data and disclosure of derivatives trading, according to its nature in accordance with the People's Republic of China Banking Regulatory Act and the People's Republic of China on commercial banks and the People's Republic of China foreign investment banking and other laws and regulations and the relevant provisions of the regulations, will be punished.
” 34, 41st is revised as follows: "for failing to effective implementation of derivatives trading, risk management and internal control systems of banks and financial institutions, may suspend or terminate their derivatives trading, eligibility, and financial penalties.
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35 in the third chapter of the risk management and the fourth chapter of the penalties of the additional chapter between the product marketing and follow-up services total 13:
"44th banking financial institutions should attach great importance to derivatives trading, risk management, develop customer suitability assessment system considering the derivative products and customer classification based on full fitness assessment of derivatives trading:
(A) assess the risk and complexity of derivatives, for the appropriate classification of derivatives, and reviewed at least once a year is reasonable, and the dynamic management;
(B) according to the customer's business, derivatives trading experience to assess their maturity, customer category, and reviewed at least once a year is reasonable, and the dynamic management.
45th banking institutions should be based on customer suitability assessment, and the real needs of customers for its risk-bearing capacity of derivatives trading, and gets the customer statements, confirmations and other written materials to prove their real needs, including, but not limited to:
(A) directly associated with derivatives transactions of the authenticity of the underlying asset or liability;
(Ii) derivatives transactions the customer's purpose or goal;
(C) whether there is basis for this article to confirm assets or liabilities related to the basis of the outstanding derivatives exposure.
46th banking financial institutions trading derivatives with customers the main risk characteristics and background of the demand for real assets or major risk characteristics of the underlying debt has reasonable correlation, in marketing and trading should be first choice basis, simple, self has the ability to value derivatives pricing. 47th banking financial institutions should develop derivatives sales training, qualification and authorization management system, strengthen the continuing professional training of sales staff and professional ethics education, keep the needle with the training and qualification of new products and new business, and establish a strict management system. Through the qualification and effectively empowers the sales staff to customers, marketing of derivative products.
When introducing derivatives to clients, sales staff should be based on appropriate ways to express customers that it has passed the internal accreditation and obtain a valid authorization.
48th banking financial institutions should be based on clear, concise wording to provide customers with derivative products and risk disclosure of written information and related disclosures presented in separate chapters, see clear way, not in margins, the bottom of the page or footnotes, and small font description, including but not limited to:
(A) the structure and basic trading terms of the presentations and the full legal text of the product;
(B) index, link with the product return instructions or other parameters;
(C) the main risk associated with the transaction disclosure;
(D) the cash-flow analysis, stress testing, and some assumptions and confidence the worst possible scenarios analysis and maximum cash flow losses and the rationality analysis of hypothesis and confidence;
(E) should be fully revealed to the customer for additional information.
49th in derivative sales process, banking institutions should be objective and fair presentation of the sale of derivatives gains and risks may not mislead the customer market view, shall not exaggerate product benefits or reduce the risk of product, shall not in any way to customer receipts.
50th article should fully respect the independent decisions of customers of banking institutions, derivative transactions may not be carried out as a guest with other business conditions.
51st banking financial institutions should establish a customer's credit rating system, and the customer's credit rating, financial status, level of profitability, net worth, cash flow and other factors, determine the relevant credit risk mitigation measures, restrictions and certain credit rating following the client's derivatives trading.
Before the 52nd derivatives deals with customers, banking institution shall obtain from the customer statements, confirmations and other forms of written material, including, but not limited to:
(A) the customers compliance of that derivative transactions;
(Ii) derivatives contracts, orders and other agreements signed by person with valid authorization;
(C) whether the customer has fully understood the derivatives transaction terms, related risks, and that the deal is in line with the 45th article confirming the transaction purpose or goal;
(D) the customer on the derivatives transaction referred to in the fourth subparagraph of article in the 48th worst possible, whether they have sufficient capacity;
(E) other matters requiring declaration or confirmation by the customer. 53rd banking financial institutions shall promptly provide the client with trading derivatives market, regularly trading derivatives with customers results in order to assess the market revaluation report, risk reminder form, by letter, e-mail, fax and other records available to customers in the form of writing, and to ensure that relevant material timely customer service. When the fluctuation in the market, should be increased market capitalisation of revaluation frequency and provides market value reassessment results in writing to the customer in a timely manner.
Banking financial institution shall, at least once a year on the market revaluation of the frequency and quality of the assessment.
54th banking financial institutions for their own do not have the ability to value pricing of derivatives trading, should offer access key value parameters and related information, and through letters, email, fax and other records provide such information in writing to the customer, to improve transparency in the derivatives market capitalisation of revaluation.
55th article banking financial institutions should for and customer trading of derivative products business type determine science reasonable of profit target, developed science reasonable of assessment evaluation and long-term incentive constraints mechanism, guide related sector and personnel honest and trustworthy, and collection rules operation, shall not excessive pursuit profit, shall not will and customer trading derivative products of related returns and employees pay and where sector of profit target and the assessment incentive mechanism simple linked.
56th banking financial institutions should develop derivatives trading business after the regular evaluation systems, including compliance marketing, risk control and performance incentive mechanism after the regular evaluation of the internal management system. Banking institutions should, through field visits, e-mail, fax, call recording, recorded way to build and perfect the system of regular visits to customers, sales compliance and risk disclosure listened to customer comments and feedback.
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36, former financial derivatives in the trading business of the interim measures for the administration of "financial institutions" for all changes "banking institutions."
This decision shall come into effect as of the date of.
The derivatives trading of banking institutions of the interim measures for the management of the operations under the terms of this decision be amended accordingly and the order adjusted accordingly, republished.
Attachment: derivatives trading business of banking institutions management 2011 (revised)
(According to the Chairman of the China Banking Regulatory Commission for the 101th meeting on amendments to the financial institutions of the derivatives trading business management revision of the interim measures decision)
Chapter I General provisions
First to regulate the derivatives business of banking institutions, effective control of the derivative business risks of banking institutions, according to the People's Republic of China Banking Regulatory Act and the People's Republic of China commercial bank law and other related laws and regulations, these measures are formulated. Second banking institutions in these measures refers to the establishment of commercial banks, urban credit cooperatives, rural credit cooperatives absorbing public deposits in financial institutions, as well as policy banks.
Legally-established financial asset management companies, trust companies, finance companies, financial leasing companies, as well as by the China Banking Regulatory Commission (hereinafter referred to as the China Banking Regulatory Commission) approved the establishment of other banking institutions in the derivatives business, these measures shall apply. Article referred to in this way that derivatives are financial contracts, whose value depends on one or more underlying assets or indices, the basic types of contracts, including forwards, futures, swaps (swap) and options.
Derivatives also include forwards, futures, swaps (swap) and options in one or more characteristics of hybrid financial instruments.
Fourth article this referred to derivatives trading business in accordance with the purposes of banking institutions are divided into two categories: (A) hedging derivatives trade. Banking financial institution initiative, in order to avoid its own assets, credit risk, market risk and liquidity risk and derivatives trading.
Such transactions subject to hedge accounting provisions, and into the bank account management. (B) non-hedging derivatives trading. With the exception of hedging derivatives trading outside of the class. Including by customer launched, banking financial institutions for meet customer needs provides of generation guest trading and banking financial institutions for hedge Qian said trading related risk and for of trading; banking financial institutions for bear do city obligations continued provides market buy, and sold bilateral price, and by its quotes and other market participants for of do City trading; and banking financial institutions active launched, using owned funds, according to on market trend of judge, to profit for purpose for of proprietary trading. Such transactions into trading account management.
Fifth customer in these measures refers to the individual except financial institutions clients and institutional clients. Banking financial institutions to sell financial products to customers if a derivative nature, the application of this approach to product design, trade, management, customer access and sales for the China Banking Regulatory Commission on the relevant provisions of the financial services.
Risk of personal derivatives trading and sales links the application of relevant provisions of the personal finance business.
The sixth opening derivatives trading business of banking institutions shall be approved by the China Banking Regulatory Commission, and accept the supervision and inspection of the China Banking Regulatory Commission.
Eligibility for the derivatives trading business of banking institutions, should be engaged in its own risk management capabilities of business activity.
Article seventh banking institutions involved in foreign exchange, commodities, energy and equity-related derivatives and derivatives transactions in the field should have the approval of the China Banking Regulatory Commission's derivatives trading business qualifications and comply with the Foreign Exchange Administration and other relevant regulations of the State.
Chapter II administration of market access
Eighth initiation of dealings of derivative products eligible for banking financial institutions are divided into the following two categories:
(A) basic qualifications: only engaged in hedging derivatives trading; (B) the General qualifications: in addition to basic qualifications may engage in derivative transactions can also engage in non-hedging derivatives trading.
Under the banking risk management of financial institutions, regulators can its specific business model, product types implement differentiated qualification and management.
Nineth banking institutions eligibility criteria for Foundation classes, subject to the following conditions:
(A) have sound derivatives trading risk management systems and internal control systems;
(Ii) has accept related derivative products trading skills specifically training half above, and engaged in derivative products or related trading 2 years above of trading personnel at least 2 name, related risk management personnel at least 1 name, risk model research personnel or risk analysis personnel at least 1 name, familiar sets period accounting operation program and system specification of personnel at least 1 name, above personnel are needed designed gang hand, mutual shall not who, and no bad records;
(C) appropriate trade premises and equipment;
(D) dealing with legal Affairs and professional departments responsible for internal control compliance checks and related professionals;
(E) meet the prudential requirements of the CBRC, China;
(Vi) other conditions prescribed by the CBRC, China.
Article tenth of banking institutions eligibility criteria for General category, in addition to the above basic eligibility conditions also need to satisfy the following conditions:
(A) comprehensive derivatives trading, ago, automatically join the business, and the background processing system and real-time risk management systems;
(B) the derivatives trading business executives should have at least 5 years directly involved in derivatives trading activities or risk management experience, and has no adverse record;
(C) strict separation system, ensure that the business of hedging and non-hedging business marketing information, risk management, effective separation of profit and loss accounting;
(D) improvement of credit risk, market risk, operational risk, risk management framework;
(V) other conditions prescribed by the CBRC, China. 11th foreign banks to engage in derivatives trading business, local regulators should be signed by an authorized signatory of application materials submitted, after reviewing the agreement, China Banking Regulatory Commission for approval.
Foreign-funded banks, Sino-foreign joint venture Bank shall submit application materials to the local regulators centrally by the headquarters and branches of foreign banks in China more than two initiation of dealings of derivative products, should be determined by its management in China and doing submit application materials to local regulators, after reviewing the agreement, China Banking Regulatory Commission for approval.
Branches of foreign banks apply for derivative transactions should be from their headquarters (or regional headquarters) duly authorized by their home country should have the legal framework to regulate the derivatives trading business, its home country supervisory authorities should have appropriate supervision. Application for initiation of dealings of derivative products branch of a foreign bank, without conditions in the Nineth or tenth, from their headquarters (or regional headquarters) subject to the above conditions.
While the branch should also meet the following conditions:
(A) from their headquarters (or regional headquarters) for the branch to engage in derivatives trading and other aspects of official authorized to trade and limits expressly provided;
(B) except as expressly provided in head office, all the derivatives trading through the branch on the authorization of the head office (regional headquarters) disc system in real time, from their headquarters (or regional headquarters) unified disc, open management and risk control.
The jurisdictional supervision of the banking and financial institutions are encouraged to submit application materials to local regulators, after reviewing the agreement, reported the CBRC approval; the other by the China Banking Regulatory Commission will directly monitor direct banking institutions submit application materials to the China Banking Regulatory Commission, China Banking Regulatory Commission for approval.
12th banking financial institutions apply for derivatives trading business, shall be filed with the China Banking Regulatory Commission or its agency, submit the following documents and information (one original and three copies):
(A) the initiation of dealings of derivative products application, feasibility study report and business proposal or business development plan;
(B) the derivatives trading business internal management rules and regulations;
(C) derivatives accounting system;
(D) managers and staff as the main trading and resumes;
(E) the derivatives trading risk management systems, including, but not limited to: exposure to quantitative rules or the authorized risk limit management system;
(Vi) trade premises, equipment and the security and stability of the test report;
(VII) other documents and materials required by the China Banking Regulatory Commission.
Branches of foreign banks to apply for opening derivatives trading business, when they do not have conditions in the Nineth or tenth, submitted the branch except from their headquarters (or regional headquarters) the documents and information, should also be submitted to the local banking regulatory Bureau the following files:
(A) from their headquarters (or regional headquarters) for the branch to engage in derivatives transactions and limits of formal written authorization;
(B) except as expressly provided in its head office, from their headquarters (or regional headquarters) issued to ensure that all derivatives trading by the Head Office of the branch (regional headquarters) flat trading systems in real time, from their headquarters (or regional headquarters) is responsible for flat plate, open letter of commitment of the management and risk control. 13th of the banking institutions to derivatives accounting system should comply with the relevant accounting standards. Not provided, shall be in conformity with the relevant international standards.
Branches of foreign banks can comply with its home country/head office accounting standards.
14th of the banking institutions in accordance with this regulation to trading venues, security equipment and system test report, in principle, should be made by independent third parties.
15th opening derivatives trading business of banking institutions of internal management rules and regulations shall include at least the following:
(A) guiding principles, business practice for derivatives trading business (business rules should reflect the trade principle of separation of front, middle and back office) and emergency plans;
(B) the new business, new product approval system and processes;
(C) the trades and their risk control system;
(D) derivative product trading risk model indicators and quantification management index;
(E) risk management systems and internal audit systems;
(Vi) derivative transaction business management system and evaluation system of research and development;
(G) the trader code of conduct;
(VIII) post responsibility system of transaction managers, supervisors at all levels and traders of accountability and incentive and restraint mechanisms;
(IX) on the front, middle and back office training plan for managers and staff;
(J) other content under the China Banking Regulatory Commission.
The 16th China Banking Regulatory Commission receipt of completed application submitted by the banking institutions under this approach be approved within three months from the date on which the information.
17th article banking financial institutions corporate authorized its branch institutions handle derivative products trading business, must on its risk management capacity for strictly audit, and issued about trading varieties and limit, aspects of official written authorized file; territory branch institutions handle derivative products trading business must unified through its head office (Department) system for real-time flat disc, and by Head Office (Department) unified for flat disc, and exposure management and risk control.
This branch shall receive from their headquarters (or Department) authorized or mandated change within 30th of, with its head office (Ministry) authorisation documents reported to the local banking regulatory Bureau.
Branches of foreign banks authorised to change, should take the initiative to report of the China Banking Regulatory Commission.
Chapter III risk management
18th banking financial institutions shall, in accordance with the institution's business objectives, capital strength, management capability and risk characteristics of the derivatives to determine whether suitable for derivatives trading and suitable for derivatives trading, variety and size.
Banking institutions to engage in derivatives trading business, developing new business, to explore new markets and so on before the innovation, shall consult in writing regulators. Banking institutions should gradually improve capability of independent innovation, trade management and risk management, and care involved in itself does not have the pricing power of derivatives trading.
Banking financial institutions shall not own or sell to customers might appear infinite loss of naked short selling derivatives and based on assets or derivatives linked to indexes of derivative products.
19th article banking financial institutions should according to fourth article by column derivative products trading business of classification, established and by engaged in of derivative products trading business nature, and scale and complex degree phase adapted of, and perfect of, and reliable of market risk, and credit risk, and operation risk and legal collection rules risk management system and system, and internal control system and business processing system, and equipped with perform above risk management, and internal control and business processing duties by need of has related business knowledge and skills of staff. 20th banking financial institution Board of directors or its authorized Professional Committee shall regularly on existing derivatives business case evaluation, risk management policies and procedures, ensure that it is consistent with the institution's capital strength and management level.
New product launches frequently or when significant changes in the system, there should be a corresponding increase in frequency of assessments. 21st article banking financial institutions senior management personnel should understand by engaged in of derivative products trading risk; audit assessment and approved derivative products trading business business and risk management of principles, and program, and organization, and permission of integrated management framework; and can through independent of risk management sector and perfect of check report system, at any time gets about derivative products trading risk status of information, for corresponding of supervision and guide.
On this basis, banking institutions should be once a year to evaluate their own derivatives business, and last year two copies of the assessment reports submitted to regulators before the end of January each year.
22nd banking institutions, according to the Agency's overall strength, own capital, profitability, business policy, derivatives trading and forecasts of market trends, selected and adapted to the Agency's business calculation of derivatives exposure indicators and methods.
Banking institutions should establish and strictly enforce the system of authorization and stop, establish and periodically review updates of various derivatives trading risk exposure limits, stop loss limits, emergency plans and stress testing of the systems and indicators, quota monitoring and limitation procedures developed. When trading in derivatives must strictly adhere to proper authority and exposure to risk management systems, any significant business transactions or new derivative products should be among the Board of directors or its authorized Committee or senior management approval.
In the book occurred due to changes in market or mistakes in decision-making when the deficit should be strictly enforced stop-loss system.
Deal activity has acted ultra vires or irregularities of the traders and their supervisor, strict accountability and punishment. 23rd banking institutions should be strengthened on the branches of dealings of derivative products licensing and management. Derivatives management ability, risk prevention and management level of the lower branches, shall be received on its derivatives trading privileges. Banking institutions should be specified in the corresponding risk management systems category features of major trading risk, and rescind the permission procedures.
Branches of the major derivatives trading risk, should promptly eliminate its derivatives trading privileges. Article 24th of banking institutions to engage in risk measurement, monitoring and control staff must be separately from persons involved in derivative transactions or marketing shall not be concurrently with each other; risk measurement, monitoring or control personnel can report directly to the senior management risk profile. Under this approach the classification standards set fourth in article, banking institutions are responsible for engaging in hedging and non-hedging derivatives trading personnel shall not concurrently serve as.
Banking institutions should ensure that the above information about the different types of derivatives transactions separate from each other.
25th banking financial institutions should develop clear traders, analysts, sales personnel and other employees qualification standards, depending on the complexity of derivatives trading and risk management to business sales personnel training and other related services personnel to ensure that he possesses the necessary skills and qualifications.
Article 26th banking institutions to make reasonable cost and asset analysis system and standard incentive and constraint mechanism of science, not derivatives trading and risk management performance for the current period and income of a simple hook to avoid excessive pursuit of interests, increase trading risks.
27th banking institutions should be on derivatives trading executives and traders in the regular job rotation and mandatory paid leave. 28th the internal audit Department of banking institutions to derivatives trading risk management systems on a regular basis on the implementation of inspections.
For the derivatives trading system and operational internal audit should have the following elements:
(A) ensure that a sufficient number of internal audit staff with relevant experience and skill;
(B) establish the internal audit department's independent reporting line to the Board. 29th banking financial institutions shall establish and improve legal risk control mechanism and system, strict review of legal status of the counterparty and transaction qualifications.
Banking financial institutions entered into derivatives contracts with a counterparty should refer to international and domestic market practices, after fully considering the events of default operational factors such as legal means of recourse to preservation, to take effective measures to prevent contracts drafting, negotiating and concluding legal risk in the process.
30th banking institutions should be developed for derivatives contracts and other legal text assessment and management systems at least once a year according to the counterparty, derivatives trading on involves the contract effectiveness, assess the effect of the text, understand and master, and effectively guard against legal risks. 31st article should be developed to assess counterparties of banking institutions of appropriate policies: include assessing whether the counterparty to fully understand the terms of the contract and the fulfilment of contractual obligations, identify whether the derivative transactions to be carried out in accordance with purpose of counterparty itself to engage in derivative transactions.
At the time of fulfilment of the requirements of this article, banking institutions according to the principle of honesty and credit reasonably relied on the formal written document provided by the counterparty.
32nd banking financial institutions should develop a counterparty credit risk management system, selecting the appropriate methods and models to assess counterparty credit risk and to take appropriate risk mitigation measures.
Banking institutions should be based on appropriate ways to express to a counterparty credit risk mitigation measures related to the potential impact on the.
33rd banking institutions should use appropriate risk assessment methods or models for derivatives trading market risk assessment, risk management markets according to market principles (derivatives market valuation is reasonable use of third-party independent valuation of offer), adjust the size, nature and level of exposure.
34th banking financial institutions engaged in hedging derivatives trading shall be conducted by asset and liability management department according to the real needs of this body decided to launch trading and deal-making.
35th banking financial institutions engaged in non-hedging derivatives transactions, provision should be made for such derivatives exposure to market risk capital market risk capital calculation method in accordance with the capital adequacy ratio management of commercial bank and the commercial bank market risk capital within the relevant provisions of the model law Guide. Article 36th banking institutions to engage in non-hedging derivatives trading, which under the law of the market risk capital shall not exceed 3% of the core capital of banking institutions. Regulators according to the business of banking institutions in the capital ratio requirements within the dynamic management.
Standards under the law of the market risk capital is calculated in accordance with the relevant provisions of the commercial banks ' capital adequacy ratio management approach implementation.
37th banking institutions should be according to the size of the derivatives trading with categories, establish a sound liquidity risk monitoring and early-warning systems, adequate liquidity arrangements, ensure that abnormal market conditions, have sufficient ability to perform. 38th banking financial institutions should establish a sound risk control mechanism and system, clear derivatives trading operations and monitoring responsibilities, including, but not limited to: transaction files generated entry, trade confirmations, and net delivery, the market value of transactions reviewed, revaluation, exception reporting, accounting, and so on.
Derivatives trading process files and sound recordings should be unified into the file system management and function checked regularly.
39th banking financial institution shall, in accordance with the provisions of the CBRC, China engaged in derivatives trading, liquidation, ensure compliance with delivery responsibilities, specification of default and termination event, prompt recognition and control operational risk.
40th banking financial institutions should establish a sound management information system for derivatives trading, according to product, classification of counterparties, such as complete and effective management information.
41st banking financial institution shall, in accordance with the provisions of the CBRC, China submitted related to derivatives accounting, statistical and other reports.
Banking financial institutions shall, in accordance with provisions of China Banking Regulatory Commission on information disclosure, disclose the risks involved in derivatives transactions with foreign status changes, losses, profits and unusual circumstances.
42nd banking financial institutions engaged in derivatives trading, there is a serious business risk or significant business loss, should take prompt and effective measures to halt losses continue to expand, while the situation to the China Banking Regulatory Commission report in a timely manner.
Banking institutions are engaged in derivatives trading, operating system, risk management system, and when a significant change occurs, the CBRC, China should take the initiative to report details.
43rd China Banking Regulatory Commission can check information on derivatives trading business of banking institutions and reporting systems, internal control systems, risk management and business process system is compatible with the kinds of dealings of derivative products.
The fourth chapter product marketing and follow-up services
44th banking financial institutions should attach great importance to derivatives trading, risk management, develop customer suitability assessment system considering the derivative products and customer classification based on full fitness assessment of derivatives trading:
(A) assess the risk and complexity of derivatives, for the appropriate classification of derivatives, and reviewed at least once a year is reasonable, and the dynamic management;
(B) according to the customer's business, derivatives trading experience to assess their maturity, customer category, and reviewed at least once a year is reasonable, and the dynamic management.
45th banking institutions should be based on customer suitability assessment, and the real needs of customers for its risk-bearing capacity of derivatives trading, and gets the customer statements, confirmations and other written materials to prove their real needs, including, but not limited to:
(A) directly associated with derivatives transactions of the authenticity of the underlying asset or liability;
(Ii) derivatives transactions the customer's purpose or goal;
(C) whether there is basis for this article to confirm assets or liabilities related to the basis of the outstanding derivatives exposure.
46th banking financial institutions trading derivatives with customers the main risk characteristics and background of the demand for real assets or major risk characteristics of the underlying debt has reasonable correlation, in marketing and trading should be first choice basis, simple, self has the ability to value derivatives pricing. 47th banking financial institutions should develop derivatives sales training, qualification and authorization management system, strengthen the continuing professional training of sales staff and professional ethics education, keep the needle with the training and qualification of new products and new business, and establish a strict management system. Through the qualification and effectively empowers the sales staff to customers, marketing of derivative products.
When introducing derivatives to clients, sales staff should be based on appropriate ways to express customers that it has passed the internal accreditation and obtain a valid authorization.
48th banking financial institutions should be based on clear, concise wording to provide customers with derivative products and risk disclosure of written information and related disclosures presented in separate chapters, see clear way, not in margins, the bottom of the page or footnotes, and small font description, including but not limited to:
(A) the structure and basic trading terms of the presentations and the full legal text of the product;
(B) index, link with the product return instructions or other parameters;
(C) the main risk associated with the transaction disclosure;
(D) the cash-flow analysis, stress testing, and some assumptions and confidence the worst possible scenarios analysis and maximum cash flow losses and the rationality analysis of hypothesis and confidence;
(E) should be fully revealed to the customer for additional information.
49th in derivative sales process, banking institutions should be objective and fair presentation of the sale of derivatives gains and risks may not mislead the customer market view, shall not exaggerate product benefits or reduce the risk of product, shall not in any way to customer receipts.
50th article should fully respect the independent decisions of customers of banking institutions, derivative transactions may not be carried out as a customer of other business conditions.
51st banking financial institutions should establish a customer's credit rating system, and the customer's credit rating, financial status, level of profitability, net worth, cash flow and other factors, determine the relevant credit risk mitigation measures, restrictions and certain credit rating following the client's derivatives trading.
Before the 52nd derivatives deals with customers, banking institution shall obtain from the customer statements, confirmations and other forms of written material, including, but not limited to:
(A) the customers compliance of that derivative transactions;
(Ii) derivatives contracts, orders and other agreements signed by persons authorized by a valid;
(C) whether the customer has fully understood the derivatives transaction terms, related risks, and that the deal is in line with the 45th article confirming the transaction purpose or goal;
(D) the customer for the derivative transaction in the 48th article mentioned in the fourth worst possible whether they have sufficient capacity;
(E) other matters requiring declaration or confirmation by the customer. 53rd banking financial institutions shall promptly provide the client with trading derivatives market, regularly trading derivatives with customers results in order to assess the market revaluation report, risk reminder form, by letter, e-mail, fax and other records available to customers in the form of writing, and to ensure that relevant material timely customer service. When the fluctuation in the market, revaluation frequency should increase market value, market value and provided to the customer in writing in a timely manner the reassessment.
Banking financial institution shall, at least once a year on the market revaluation of the frequency and quality of the assessment.
54th banking financial institutions for their own do not have the ability to value pricing of derivatives trading, should offer access key value parameters and related information, and through letters, email, fax and other records provide such information in writing to the customer, to improve transparency in the derivatives market capitalisation of revaluation.
55th article banking financial institutions should for and customer trading of derivative products business type determine science reasonable of profit target, developed science reasonable of assessment evaluation and long-term incentive constraints mechanism, guide related sector and personnel honest and trustworthy, and collection rules operation, shall not excessive pursuit profit, shall not will and customer trading derivative products of related returns and employees pay and where sector of profit target and the assessment incentive mechanism simple linked.
56th banking financial institutions should develop derivatives trading business after the regular evaluation systems, including compliance marketing, risk control and performance incentive mechanism after the regular evaluation of the internal management system.
Banking institutions should, through field visits, e-mail, fax, telephone recording, you can record to establish and perfect the system of regular visits to customers, sales compliance and risk disclosure listened to customer comments and feedback.
Chapter fifth penalty
57th banking financial institution unauthorized initiation of dealings of derivative products, according to the People's Republic of China banking regulatory act for punishment.
58th on the effective implementation of derivatives trading, risk management and internal control systems of banks and financial institutions, may suspend or terminate their derivatives trading, eligibility, and financial penalties.
59th banking institutions are not in accordance with these measures or requirements of China Banking Regulatory Commission to submit relevant reports, information and disclosure of derivatives trading, according to its nature in accordance with the People's Republic of China Banking Regulatory Act and the People's Republic of China on commercial banks and the People's Republic of China foreign investment banking and other laws and regulations and the relevant provisions of the regulations, will be punished.
60th article banking financial institutions of derivative products trading personnel (including competent, and risk management personnel, and Analysis Division, and trading personnel,), and institutions violation this approach about provides violations operation, caused this institutions or customer major economic loss of, the banking financial institutions should on directly is responsible for of senior management personnel, and competent personnel and directly responsibility people give demerit until fired of disciplinary; constitute crime of, transfer judicial organ law held criminal.
The sixth chapter supplementary articles
61st this approach by the China Banking Regulatory Commission is responsible for the interpretation. 62nd earlier released the relevant provisions of the derivatives trading of banking institutions, inconsistent with this approach, is subject to this approach. For the content of these rules, otherwise prescribed by laws or administrative rules and regulations, from its provisions.
