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  Home Page > Personal Banking >Cross-border Financial Services >ICBC Currency Exchange >Spot Exchange Settlement
Spot Exchange Settlement
 

I. Business Description
During the spot FX settlement and sale business, the customers exchange the funds of foreign exchanges and RMB with ICBC on spot based on the price quotation published by ICBC in the real time, on the condition that the customers and ICBC both meet requirements of the national foreign exchange policy.

II. Target Customers
The individuals and corporate customers such as governmental agencies, corporate and public institutions, social organizations, armies, and foreign invested enterprises that are established within the territory of the People’s Republic of China (excluding Hong Kong, Macau and Taiwan) with related service needs.

III. Features and Advantages
i. Main Features of the Spot FX Settlement and Sale Business
1. Spot FX settlement and sale is the most fundamental tool of exchange between foreign exchanges and RMB. It has simple, clear and easy-to-understand trade structure.
2. The spot FX settlement and sale transactions involve simple and expedite procedures. Funds can be paid into the customers’ accounts in real time upon completion of the transaction.
ii. ICBC’s Advantages in the Spot FX Settlement and Sale Business
1. ICBC is one of the most influential market markers in the inter-bank RMB market. It is able to hedge the transaction risks at relatively low cost, and therefore offers preferential prices to the customers.
2. The personal customers of ICBC may handle the spot FX settlement and sale business through the online banking system of ICBC; and the spot FX settlement and sale business handled via the online banking system is entitled to certain exchange rate spread preference based on the customers’ level of status.

IV. Case Illustration
In September 2010, a customer consulted about the spot FX settlement and sale business with ICBC after receiving a large sum of US dollar income. The then spot exchange rate of US dollar versus RMB is 6.7. Considering evolvement of the government’s foreign exchange management policy since June 2010 as well as development of the foreign exchange market and the domestic economic situations, the Bank believed that the exchange rate of US dollar relative to RMB would sustain a moderate declining trend in the medium term, and thus recommended the customer to settle the foreign exchange immediately to lock up the cost. After the customer settled the foreign exchange income, exchange rate of the US dollar relative to RMB had been continuously declining during the remainder of the year.

V. Conditions for Application
1. Personal Spot FX Settlement and Sale Business
FX settlement and sale of domestic personal customers is subject to annual quota management pursuant to provisions of the national foreign exchange management policy. At present, the annual limit of personal FX settlement and sale is equivalents of less than (inclusive) USD50,000. Personal customers need to provide effective certificates to confirm authentication of the business needs in case the annual FX settlement and sale quota is exceeded. Overseas personal customers shall handle the FX settlement and sale business by presenting their own effective ID and relevant testimonial materials pursuant to requirements of the Personal Foreign Exchange Management Measures (Zh.G.R.M.Y.H.L [2006] No.3) and the Implementing Detailed Rules of the Personal Foreign Exchange Management Measures (H.F. [2007] No.1).
2. Corporate Spot FX Settlement and Sale Business
The customers shall present relevant approval documents, effective certificates, commercial bills and other materials required by the State Administration of Foreign Exchange.

VI. Sign-up
1. Personal Spot FX Settlement and Sale Business
For the personal customers that don’t exceed the annual FX settlement and sale quota or those that exceed the annual quota but are able to provide effective certificate to confirm the authentication of business needs, they shall present their own effective ID , and fill in and submit the Application for Personal FX Settlement and Sale Business of Industrial Bank of China Limited or Application for Personal FX Purchase Business of Industrial and Commercial Bank of China Limited Due to Personal Reasons after the ID is examined and verified by the Bank’s tellers to handle the business.
In case that a personal customer exceeds the annual FX settlement and sale quota, he/she shall also present the relevant testimonial documents that are consistent with requirements of the national foreign exchange management policies in handling the business.
2. Corporate Spot FX Settlement and Sale Business
The corporate customers shall present relevant materials and directly apply to banking outlets of the Bank. After the materials are examined and verified by the Bank’s tellers, they can handle the spot FX settlement and sale business.

VII. Service Channel and Time
i. Counter Service
Customers meeting requirements of the national foreign exchange policy may directly handle the spot FX settlement and sale business through designated outlets of the branches that are qualified to handle the foreign exchange purchase and sale business during the office hours by showing relevant materials.
ii. Online Banking Service
Personal customers may handle the spot FX settlement and sale business through the online banking system of ICBC during 9:00 and 22:00 from Monday to Sunday (Beijing time); and corporate customers may handle the spot FX settlement business through the online banking system of ICBC during 9:30 and 17:30 from Monday to Monday (Beijing time). The spot FX sale business for corporate customers are currently not available.

VIII. Operation Guide
i. Flowchart of the Personal Spot FX Settlement and Sale Business
(i) Flowchart of the Personal Spot FX Settlement Business
(ii) Flowchart of the Personal Spot FX Sale Business
ii. Flowchart of Corporate Spot FX Settlement and Sale Business

IX. Risk Warning
Due to uncertainties in fluctuation of the exchange rates, while customers can lock up their exchange rate cost or revenues, they will be unable to enjoy the extra returns arising from exchange rate fluctuation after handling the spot FX settlement and sale business, if the future exchange rate is superior to the then spot exchange rate.

X. Matters Meriting Attention
1. The customer shall provide the relevant credentials and the compliant and effective testimonial materials required by the State Administration of Foreign Exchange, and cooperate with the Bank in completing the due diligence.
2. Only after relevant materials of the customer is examined and verified by the Bank’s tellers, can the customers submit the official application for the FX settlement and sale business. Upon confirmation of the transaction, the Bank will issue business vouchers to the customers.
3. The Bank quota the exchange rates based on the middle rate and the floating range specified by the State Administration of Foreign Exchange every day, as well as the price trends in the RMB and foreign exchange markets, and update the quotations in real time based on the market development.

XI. Definitions
Pursuant to requirements of the Personal Foreign Exchange Management Measures (Zh.G.R.M.Y.H.L [2006] No.3), the domestic individuals refer to the citizens that hold the identity card (including the temporary identify card), the military soldier’s identify card or the armed policeman’s identify card issued by the People’s Republic of China; and the overseas individuals refer to the foreign nationals (including the stateless persons) and the compatriots in Hong Kong, Macau and Taiwan that hold the passport, the Mainland travel permit for Hong Kong and Macau residents and the Mainland travel permit for Taiwan residents.
Spot FX settlement: the customers sell foreign exchange to ICBC, and ICBC pays an equivalent amount of RMB to the customers based on the real-time exchange rate on the transaction date.
Spot FX sale: the customers buy foreign exchange from ICBC, and ICBC collects an equivalent amount of RMB from the customers based on the real-time exchange rate on the transaction date.

The above is for reference only. Details refer to the rules drawn up by local ICBC branch. To save your time, please call your local ICBC before applying for the service.

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