PROVISIONS ON ADMINISTRATION OF BUY AND SALE OF SPOT AND FORWARDFOREIGN EXCHANGE BY FINANCIAL INSTITUTES ON CLIENTS' BEHALF
PROVISIONS ON ADMINISTRATION OF BUY AND SALE OF SPOT AND FORWARDFOREIGN EXCHANGE BY FINANCIAL INSTITUTES ON CLIENTS' BEHALF
This English document is coming from the "LAWS AND REGULATIONS OF THE
PEOPLE'S REPUBLIC OF CHINA GOVERNING FOREIGN-RELATED MATTERS" (1991.7)
which is compiled by the Brueau of Legislative Affairs of the State
Council of the People's Republic of China, and is published by the China
Legal System Publishing House.
In case of discrepancy, the original version in Chinese shall prevail.
Whole Document
PROVISIONS ON ADMINISTRATION OF BUY AND SALE OF SPOT AND FORWARD
FOREIGN EXCHANGE BY FINANCIAL INSTITUTES ON CLIENTS' BEHALF
(Approved by the State Council on December 13, 1987, promulgated
by the State Administration of Foreign Exchange Control on March 5, 1988)
Article 1
These Provisions are formulated in order to guard against the risks of
foreign exchange rate, stabilize the costs of import and export trade
(including other foreign economic activities) and develop the businesses
of buy and sale of spot and forward foreign exchange.
Article 2
The Bank of China may be entrusted to buy and sell spot and forward
foreign exchange by departments, organizations, enterprises, institutions
and other units (hereinafter referred to as the client) in the territory
of China.
Other financial institutions intending to conduct the businesses mentioned
in the preceding paragraph shall be approved by the State Administration
of Foreign Exchange Control.
Article 3
Buy and Sale of foreign exchange referred to in these Provisions means the
buy and sale conducted among various convertible currencies.
Article 4
The client intending to entrust the Bank of China or other financial
institutions approved by the State Administration of Foreign Exchange
Control (hereinafter referred to as the designated financial agency) on
its behalf to buy and sell spot and forward foreign exchange shall be
approved by the State Administration of Foreign Exchange Control or its
local departments except for the following two situations: 1) Specialized
banks, financial institutions and foreign invested enterprises with
foreign investment with approval to conduct foreign exchange businesses,
for their self-owned or self-raised capitals of foreign exchange, may buy
and sell spot or forward foreign exchange by themselves in the
international financial market or entrust the designated financial
agencies to handle such businesses.
2) Other clients not stipulated in the above paragraph who borrow foreign
exchange in cash within or out of China and receive, with permission,
donated foreign exchange, upon the approval to open cash account of
foreign exchange in financial institutions within China, may entrust the
designated financial agencies to buy and sell on their behalf spot or
forward foreign exchange according to the foreign trade contracts or other
economic agreements.
Article 5
The principle of voluntariness shall be adhered to in the transactions of
buy and sale of spot and forward foreign exchange.
Article 6
The designated financial agency which is entrusted by a client to buy and
sell spot and forward foreign exchange shall base the transaction on the
foreign trade contracts or economic agreements signed by the client, but
transactions entrusted by the financial institutions with approval to
conduct foreign exchange and enterprises with foreign investment are
excepted.
Article 7
When the designated financial agency is entrusted by a client to buy and
sell spot or forward foreign exchange, the client shall provide
performance guarantee. Mortgage of foreign exchange quota or advance
payment of performance bond in cash may be used as the performance
guarantee.
The letter of guarantee for CNY at equal value issued by the deposit bank
shall be simultaneously provided in case the foreign exchange quota is
mortgaged as guarantee. In case the foreign exchange quota is settled
ahead of time into foreign exchange in cash to pay the performance bond in
advance, the settlement is limited to using US dollar.
Article 8
When a client buys and sells forward foreign exchange, application and
copies of trade contracts or other economic agreements shall be submitted
to the local department of foreign exchange control in accordance with the
stipulation of Article 6. After being examined and approved by the
department of foreign exchange control, the client may entrust the
designated financial agency to buy forward foreign exchange by presenting
the approval documents of the department of foreign exchange control.
Article 9
In case the foreign exchange quota is settled ahead of time into foreign
exchange in cash to pay the performance bond in advance, the department of
foreign exchange control shall endorse the payment notice of foreign
exchange quota issued by the client with the date and its stamp and shall
deduct the foreign exchange ration. The client in the same city shall
within 3 working days after the date of the endorsement (7 working days
for the client in a different city) buy US dollars from the quota and
deposit them into the account of "specific guarantee deposit" in the
designated financial agency. In case the foreign exchange quota is
mortgaged, the department of foreign exchange control shall transfer the
foreign exchange quota mortgaged by the client to the account of foreign
exchange quota in the designated financial agency.
In case the option transaction is entrusted by the client, only foreign
exchange quota can be mortgaged as guarantee, but the insurance premium of
option which should be paid upon conclusion of the transaction may be
settled in advance into foreign exchange in cash.
Article 10
When the designated financial agency is entrusted to buy and sell spot and
forward foreign exchange, if the client uses the foreign exchange quota to
settle ahead of time into foreign exchange in cash and pay the performance
bond in advance for the transaction of forward foreign exchange, the
designated financial agency shall check and calculate through the account
of "specific guarantee deposit"; but if the client uses the cash of
foreign exchange originally owned to pay the performances bond in advance
for the transaction of forward foreign exchange, the designated financial
agency shall still check and calculate through the account of "guarantee
deposit".
Article 11
In case the date of import payment is behind the date of delivery, if the
foreign exchange quota is settled ahead of time into foreign exchange in
cash, designated financial agency shall redeposit temporarily the cash
position derived from the delivery into the account of "specific guarantee
deposit"; and if the cash of foreign exchange originally owned is used,
the designated financial agency shall re-deposit the cash position derived
from the delivery into the account of "guarantee deposit"
Article 12
The authority to interpret these Provisions resides in the State
Administration of Foreign Exchange Control.
Article 13
These Provisions shall enter into force as of the date of promulgation.
ent may entrust the
designated financial agency to buy forward foreign exchange by presenting
the approval documents of the department of foreign exchange control.
Article 9
In case the foreign exchange quota is settled ahead of time into foreign
exchange in cash to pay the performance bond in advance, the department of
foreign exchange control shall endorse the payment notice of foreign
exchange quota issued by the client with the date and its stamp and shall
deduct the foreign exchange ration. The client in the same city shall
within 3 working days after the date of the endorsement (7 working days
for the client in a different city) buy US dollars from the quota and
deposit them into the account of "specific guarantee deposit" in the
designated financial agency. In case the foreign exchange quota is
mortgaged, the department of foreign exchange control shall transfer the
foreign exchange quota mortgaged by the client to the account of foreign
exchange quota in the designated financial agency.
In case the option transaction is entrusted by the client, only foreign
exchange quota can be mortgaged as guarantee, but the insurance premium of
option which should be paid upon conclusion of the transaction may be
settled in advance into foreign exchange in cash.
Article 10
When the designated financial agency is entrusted to buy and sell spot and
forward foreign exchange, if the client uses the foreign exchange quota to
settle ahead of time into foreign exchange in cash and pay the performance
bond in advance for the transaction of forward foreign exchange, the
designated financial agency shall check and calculate through the account
of "specific guarantee deposit"; but if the client uses the cash of
foreign exchange originally owned to pay the performances bond in advance
for the transaction of forward foreign exchange, the designated financial
agency shall still check and calculate through the account of "guarantee
deposit".
Article 11
In case the date of import payment is behind the date of delivery, if the
foreign exchange quota is settled ahead of time into foreign exchange in
cash, designated financial agency shall redeposit temporarily the cash
position derived from the delivery into the account of "specific guarantee
deposit"; and if the cash of foreign exchange originally owned is used,
the designated financial agency shall re-deposit the cash position derived
from the delivery into the account of "guarantee deposit"
Article 12
The authority to interpret these Provisions resides in the State
Administration of Foreign Exchange Control.
Article 13
These Provisions shall enter into force as of the date of promulgation.
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