Notice of the State Administration of Foreign Exchange on the Foreign Exchange Administration Issues concerning the Improvement of Forward Foreign Exchange Settlement and Sale

· Document Number：No. 3 [2018] of the State Administration of Foreign Exchange

· Area of Law： Foreign Exchange

· Level of Authority： Departmental Rules

· Date issued：02-12-2018

· Effective Date：02-12-2018

· Status： Effective

· Issuing Authority： State Administration of Foreign Exchange

Notice of the State Administration of Foreign Exchange on the Foreign Exchange Administration Issues concerning the Improvement of Forward Foreign Exchange Settlement and Sale
(No. 3 [2018] of the State Administration of Foreign Exchange)
The branches and foreign exchange administrative departments of the State Administration of Foreign Exchange (“SAFE”) in all provinces, autonomous regions, and municipalities directly under the Central Government; the SAFE branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo; and all national Chinese-funded banks:
To further deepen the development of the foreign exchange market, and better serve the real economy, you are hereby notified of the foreign exchange administration issues concerning the improvement of forward foreign exchange settlement and sale as follows:
I. Where a bank handles the forward foreign exchange settlement and sale business for clients, it may, under the principle of actual need, choose the delivery method of gross settlement or balance settlement according to the need for hedging. The currency adopted in balance settlement shall be RMB, and the reference price used to determine the netting amount shall be a real and valid market exchange rate in China.
II Where a bank handles the forward foreign exchange settlement and sale business for clients in the delivery method of balance settlement, it shall be incorporated into the administration of synthetic positions in foreign exchange, and the relevant statements shall be submitted in accordance with the Notice of the General Affairs Department of the State Administration of Foreign Exchange on Issues concerning Adjustments to Statistical Statements on the Foreign Exchange Settlement and Sale of Banks (No. 4 [2017], General Affairs Department of the SAFE).
III. Banks shall improve their business innovation and management capabilities, actively support clients in effectively conducting foreign exchange risk management, improve the risk education of clients, guide the establishment of a concept of risk neutral, and conduct the foreign exchange derivative business in a reasonable and prudent manner.
IV. This Notice shall come into force on the date of issuance. For any discrepancies between any provisions previously issued and this Notice, this Notice shall prevail.
All branches and foreign exchange administrative departments of the SAFE shall, upon receipt of this Notice, forward it to relevant financial institutions within their respective jurisdictions in a timely manner.
State Administration of Foreign Exchange
February 12, 2018