Golden Opportunity for Banks in China: New Rules Issued to Allow Commercial Banks to Trade Gold Futures
The new circular issued by the CBRC represents a step towards the wider acceptance of commodities futures transactions, helping banks generate more business, provide more flexibility in gold trading, and improve competitiveness. The various conditions, application procedures and other requirements are extensive; while there are still some concerns about the operation of the new regulation, it is a step in the right direction.
Date:
June 2008
Keywords (click to search): [CBRC] [Gold trading]
On January 9 2008 the first gold futures product was launched on the Shanghai Futures Exchange. On March 24 2008 the China Banking Regulatory Commission (CBRC) issued a new circular entitled Circular of CBRC General Office on Certain Issues relating to Commercial Banks Engaging in Domestic Gold Futures Business (CBRC Circular). This new regulation was warmly welcomed by not only commercial banks, but also by futures trading groups and the Shanghai Futures Exchange.
Why is the CBRC Circular so significant? This is the first time since the promulgation of the Regulations on the Administration of Futures Transactions by the State Council in March 2007 that commercial banks in China have been allowed to engage in a specific type of commodities futures transaction. Previously, commercial banks were only permitted by law to engage in certain financial futures transactions (mostly relating to currency and interest rates), but not commodities futures transactions. This...
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