Chinese Regulator to Liberalize Access of Non-Banks to Interbank Foreign Exchange Market

According to sources cited in the Chinese press, the country’s State Administration of Foreign Exchange (SAFE) is gearing towards allowing more financial institutions to engage in trading activities on the foreign exchange market in China. According to the reports, the regulator has already issued a draft circular which has been distributed to market participants, looking for their opinion on the matter.

Under the present regulatory framework only banks and the finance arms of big state-owned enterprises (SOEs) have direct access to the interbank foreign exchange market. The steps taken by SAFE could be the first of many to allow brokers, insurance companies, investment funds and money brokers to enter the interbank foreign exchange market.

The move comes after SAFE announced some close checks of business conduct of banks in April and left the door open for more FX businesses, while mentioning a regulatory framework.

Back in August, the SAFE issued a document named Guidelines on the Professional Ethics and Market Practices in the Interbank Foreign Exchange Market, which was the first step taken by the regulator to address the needs for a broadening of the framework of the Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term market.

Promotion and Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term on the foreign exchange market has been high on the agenda of Chinese authorities. The Guidelines have been described as a self-regulatory document aimed at regulating transactions in the interbank foreign exchange market and as an effective supplement to the regulatory documents, conducive to promoting the establishment of a new foreign exchange market administration framework.

In its typically more laissez-faire approach than many Western countries towards the market, according to SAFE, the interbank foreign exchange market will be led by industry self-regulation and only assisted by government regulation.

After the Chinese foreign exchange regulator allowed the introduction of FX options and FX swaps a couple of years back, the efforts towards market reform have been progressing, albeit at a slow pace. Recently, global brokerage company BGC Partners, announced that its subsidiary, China Credit BGC Money Broking Company Ltd (CCTBGC) has been granted a State license to deal FX options in mainland China.