Financial institutions seeking to engage in bond forward transactions are required to sign a Master Agreement for Financial Derivative Transactions in the China Interbank Market issued by the National Association of Financial Market Institutional Investors.
According to the Administrative Rules for Bond Forward Transactions in the National Interbank Market, investors shall establish and improve an internal management system and a risk prevention mechanism in order to prevent the possible risks involved in forward transactions. Information on the internal management system shall be submitted to relevant supervision departments and shall be copied to the National Interbank Funding Center and the China Government Securities Depository Trust & Clearing Co. Ltd. (CDC).
In addition, financial institutions shall submit the corresponding net values of their assets, their RMB working capital, and their paid-up capital or net asset value before conducting transactions. The overall balance of funds invested in net purchases through forward transactions shall not exceed 100% of the net value of their assets, the overall balance of net purchases made through forward transactions by Chinese branches of foreign financial institutions shall not exceed 100% of their RMB working capital, and the overall balance of net purchases through forward transactions among other institutions shall not exceed 100% of their paid-up capital or net assets value.
Contact details for RMB Market Department of CFETS: 021-68797878 ext. RMB Business
Fax: 021-58957710