|
Notice of China Banking Regulatory Commission on the Issues Relevant to the Engagement by Commercial Banks in the Domestic Gold Futures Trading Business
In order to regulate the domestic gold futures trading business of commercial banks and effectively ward off inherent risks, the CBRC hereby issues a notice on the following items:
I. When conducting domestic gold futures trading business, commercial banks shall comply with the Law of the People’s Republic of China on Banking Regulation and Supervision, Law on Commercial Banks, Rules Governing the Futures Trading Business, Provisional Rules on Derivatives Activities of Financial Institutions, Guidance on Market Risk Management of Commercial Banks, and other relevant rules and regulations.
II. A commercial bank that plans to engage in domestic gold futures trading business shall satisfy the following requirements:
1) The capital adequacy ratio arrives at 8 per cent;
2) Having the license to trade derivatives;
3) Having the license to trade gold;
4) Being competent to manage market risk, and meeting relevant requirements prescribed in the Notice of the CBRC on Further Strengthening Market Risk Management of Commercial Banks (YJF [2006] No.89);
5) Having the certificate documents that approve the bank to engage in domestic gold futures trading business, which shall be issued by the board of directors or the institutions or senior executives authorized by the board;
6) Having a feasibility study report, which shall at least include such contents as market trend, business purpose, business demand, operational procedures, risk management approaches, prospect of profitability, etc.;
7) Having in place the internal management rules on gold futures trading business, which shall at least cover the followings: internal control, risk management, margin management, daily settlement, position restrictions and stop-loss liquidation of position, emergency measures, etc.;
8) Having in place the business processing facilities relevant to the operations of gold futures trading, which shall at least include trading system, risk management system, settlement system, accounting system, data backup center, emergency system, etc.;
9) The bank staff who have passed the qualification examinations approbated by China’s futures industry shall no less than four, among which at least 2 are traders and 2 are risk management practitioners. Besides, these people shall not take cross-positions and shall have no misconduct records.
III. Without the membership in futures exchange, no commercial bank shall engage in domestic gold futures trading business. Before submitting a formal application to the futures exchange for the membership, a commercial bank shall communicate with the CBRC on relevant issues, such as its preparation and implementation of the requirements specified in item 2 of this notice, its self-assessment report, etc., and then acquire a Consensus Letter.
IV. A commercial bank shall, within 3 days after applying for the membership of futures exchange, deliver the following documents to the CBRC: documents certifying the bank has met the requirements as prescribed in item 2 of this notice; a duplicate of written self-assessment report on the bank’s risk management and internal control capability of trading gold futures.
V. After its business commencement, a commercial bank shall make self-assessment on its risk management and internal control capability of doing this business at least once per year, and deliver relevant written reports to the CBRC.
VI. Without the qualification of conducting gold futures brokerage business, no commercial bank shall engage in such business on behalf of their clients even it is qualified to trade gold futures.
VII. Commercial banks shall make a necessary isolation arrangement for domestic gold futures trading business, and shall not take the advantage of abundant information to make illegal benefits if being appointed as the settlement bank or gold delivery bank.
VIII. This notice shall also apply to other banking institutions that engage in domestic gold futures trading business. If there is no board of directors in place at a banking institution, its business decision-making organs shall assume the board’s responsibilities as stipulated in this notice.
|
