Chinese New Year round-up: Safe relaxes onshore rules on FX forwards, HSBC completes RMB remittance first, US blocks Chinese bid to buy stock exchange
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Chinese New Year round-up: Safe relaxes onshore rules on FX forwards, HSBC completes RMB remittance first, US blocks Chinese bid to buy stock exchange

Chinese New Year 2018

China’s FX watchdog loosens its grip on FX forward settlement, HSBC becomes the first foreign bank to handle an individual RMB remittance transaction following a rule change in January and the Securities and Exchange Commission (SEC) stopped an attempt by Chinese investors to acquire the Chicago Stock Exchange.


  • China has allowed onshore FX forward sales to be settled on a net basis, according to a February 13 announcement by the State Administration of Foreign Exchange. The change will create greater competition in FX forwards’ pricing, Ken Cheung, senior Asian FX strategist at Mizuho, wrote in a February 14 note.

    “Market participants selling USDCNY forward – usually exporters – no longer need to buy the full amount of CNY for settlement at maturity, but have the flexibility to pay or receive the net basis for settlement,” said Cheung. “The customer does not need to settle the full FX amount with a single bank, it can choose the bank offering the best pricing in CNY spot and forward point separately.”

  • The China Securities Regulatory Commission signed a memorandum of understanding with Kazakhstan’s Astana Financial Services Authority on February 9, according to a February 14 announcement by the Chinese regulator. The MoU will help promote co-operation in trade and financial services between the two countries and support the Belt and Road Initiative, said the CSRC.


  • HSBC has become the first foreign bank to complete a RMB remittance for a Chinese national living abroad, following the People’s Bank of China’s relaxation in remittance rules in January, the bank said in a February 14 press release.

    In a set of rule changes aimed at encouraging RMB internationalisation, the PBoC said earlier this year that banks should help fulfil clients’ needs for cross-border RMB transactions.

    As China ramps up its efforts to promote RMB internationalisation, the change could be the first of many to come from regulators, said Helen Wong, chief executive of Greater China at HSBC.

    “We expect China will take further steps to liberalise global use of its currency, especially as it deepens international connections through the Belt and Road Initiative,” said Wong.

    The PBoC said in its latest monetary policy report, published on February 14, that it will continue to promote the RMB’s usage in cross-border trade and investment this year by improving the policy framework and infrastructure for RMB internationalisation.

    The remittance came from Australia.


  • Separately, the PBoC report also noted that 249 institutions have entered the interbank market through Bond Connect by the end of 2017. These institutions held over Rmb80bn ($12.6bn) of onshore bonds via the access scheme.



  • The SEC has blocked the sale of the Chicago Stock Exchange to a group of Chinese investors, according to a February 15 document published by the US regulator.

    The SEC said the proposed ownership structure did not comply with rules on ownership and voting rules governing exchanges in the US, but highlighted that national security concerns did not play a part in its decision to torpedo the deal.

    “It is not necessary for us to consider either the relevance of such foreign investment concerns to our statutory review of this proposed rule change or the merits of the concerns themselves,” said the SEC.

  • The bid was led by North America Casin Holdings, which is owned by the China-based Chongqing Casin Enterprise Group. Chicago Stock Exchange first asked for the SEC’s approval of the acquisition in December 2016, according to the February 15 document.

    The Dhaka Stock Exchange (DSE) has decided to sell a 25% stake to the Shanghai Stock Exchange and Shenzhen Stock Exchange, according to a February 19 local media report.

    The proposed sale will be filed with the Bangladesh Securities and Exchange Commission for approval within the next two days, Majedur Rahman, managing director at the DSE was reported as saying.

    The DSE was reportedly under pressure from the local regulator to sell the stake to the National Stock Exchange of India, said the media report.

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