I. Description The agency foreign exchange trading business refers to the product where ICBC serves as the agent of overseas central bank institutional investors entering Chinese interbank foreign exchange market and overseas commercial institutional investors entering the OTC foreign exchange market as entrusted by overseas institutions to conduct RMB-foreign currency trading, back office trading confirmation and trading capital settlement. The agency foreign exchange trading businesses provided by ICBC mainly include: 1. For central bank customers allowed to enter into Chinese inter-bank foreign exchange market by the policy, the Bank may act on behalf of customers in accordance with regulatory requirements and the customer’s needs to submit the Registration Form for Overseas Central Bank Institutions Entering the Chinese Interbank Foreign Exchange Market and the original of agency agreement to CFETS, and assist customers in completing the registration in the interbank foreign exchange market After receiving the notification of registration completion from CFETS, the Bank will act as the agent to complete the procedures for applying for the Chinese interbank foreign exchange trading membership and opening the trading system account. For overseas commercial financial institution customers who invest in Chinese interbank bond market through ICBC in transaction and settlement, the Bank may, according to the customer’s need, open a special account for foreign exchange in the branches of the Bank and handle OTC foreign exchange trading business at the branches of the Bank for customers. 2. Accept the customer’s inquiry, enter into foreign exchange trading on behalf of customers based on the customer’s authorization and provide the closing voucher or letter of confirmation. 3. Handle the fund settlement in RMB and foreign currencies according to the customer’s authorization. 4. Provide market information to customers in an objective and timely manner.
II. Target Customers 1. Overseas central bank institutions allowed by the People’s Bank of China to enter the interbank foreign exchange market through the registration system, such as overseas central banks, international financial organizations and sovereign wealth funds. 2. Overseas commercial financial institution customers who invest in Chinese interbank bond market through ICBC’s interest rate transaction and settlement services.
III. Features and Advantages 1. Rich market experience Since the establishment of the interbank market in June 1997, ICBC has started its interbank market business as one of the first batch of participating institutions. After more than two decades of market development, ICBC has accumulated a wealth of market experience. 2. Complete business qualifications ICBC, as a commercial bank with all licenses and business qualifications, has achieved integration of domestic and foreign markets and has the ability to provide comprehensive, international, and integrated efficient services for domestic and overseas customers. 3. Outstanding market position As the market maker of the interbank RMB foreign exchange market directly trading all currencies, ICBC has been the winner of Best Comprehensive Market Maker (the highest award for interbank foreign exchange market maker) granted by CFETS for many consecutive years. It is one of the most influential market makers and capable of completing trading risk hedging at a relatively lower cost, thus providing customers with competitive price. 4. Strong market influence ICBC has been the winner of the following awards for many consecutive years: Best Agent of Foreign Institutions (CFETS), Award for Outstanding Contribution in Opening-up (CFETS), Most Influential Institution (CFETS), Best Derivative Products Trading Award (CFETS) and Best Maker in the Interbank Foreign Exchange Market (CFETS). 5. Excellent agency trading and settlement achievements ICBC has been selected by CFETS as the winner of Best Agent of Foreign Institutions and Award for Outstanding Contribution in Opening-up for many consecutive years. It has assisted many well-known overseas central bank institutions in completing the first foreign exchange transaction in the interbank market. 6. Outstanding value-added services The excellent research teams of ICBC will provide customers with comprehensive market information, differentiated investment advices and dynamic portfolio management strategies in a timely manner.
IV. Qualifications Customers applying for the agency foreign exchange trading in the interbank foreign exchange market must be meet the requirements of regulators for the type of institutions allowed to enter the Chinese interbank foreign exchange market. As to the type of institutions, only overseas central bank institutions are allowed by the People’s Bank of China to enter the market through the registration system, such as overseas central banks, international financial organizations and sovereign wealth funds. The customers applying for OTC agency foreign exchange business of the Bank must be overseas commercial financial institution customers who invest in Chinese interbank bond market through ICBC’s interest rate transaction and settlement services. Specifically, it includes commercial banks, insurance companies, securities companies, fund management companies, and other assets management agencies that are legally incorporated outside the People’s Republic of China, as well as other medium-to-long-term institutional investors that are recognized by the PBOC, such as investment portfolios released by the abovementioned financial institutions in a lawful, compliant manner, pension funds, charity funds, and donation funds, etc.
V. Service Channels and Time The customers may apply to the ICBC branches running the business or the Head Office for the agency foreign exchange trading business during the business hours.
VI. Operation Guide i. Business initiation 1. The overseas central bank customers applying for the agency foreign exchange trading in the interbank foreign exchange market must meet the eligibility requirements of regulators. Overseas customers applying for agency foreign exchange trading and settlement services must submit relevant registration and application materials required by regulators and intermediary service agencies, the agency foreign exchange trading authorization required by the Bank, and the agency foreign exchange trading agreement signed with the Bank. ICBC may act on behalf of customers in accordance with regulatory requirements and the customer’s needs to submit the Registration Form for Overseas Central Bank Institutions Entering the Chinese Interbank Foreign Exchange Market and the original of agency agreement to CFETS to complete the registration of customer’s entry and agency agreement. After receiving the notification of registration completion from CFETS, ICBC will act as the agent to complete the procedures for applying for the Chinese interbank foreign exchange trading membership and opening the trading system account. 2. When overseas commercial financial institution customers who invest in Chinese interbank bond market through ICBC’s interest rate transaction and settlement services apply for the counter agency foreign exchange trading business, the trading need must meet the principle of trading based on real demand laid down by regulators. After the customer’s trading need passes the verification against the principle of trading based on real demand, the branch opening the special foreign exchange account will handle the foreign exchange trading business for customers. ii. Agency foreign exchange trading 1. When the customer has foreign exchange trading need, the Bank may accept the customer’s request for foreign exchange trading inquiry presented by telephone, email, Reuters RM or with other mutually agreed methods; the agency trader will provide the inquiry result to the customer on the basis of sufficient communication, and ask the customer to acknowledge the receipt of inquiry result. 2. If the customer agrees with the inquiry result, it shall fill in the foreign exchange transaction commission according to the inquiry result; if the customer does not agree with the inquiry result, it shall promptly notify the agency trader by telephone, mail, fax, Reuters RM or other means approved by both parties. 3. After the foreign exchange trading is reached, the agency trader shall, as requested by customers, provide the customer with transaction closing voucher or confirmation through e-mail or other ways agreed upon by both parties. iii. Agency foreign exchange settlement If the customer selects ICBC to provide agency fund settlement services, for the one-stop service customer, the Head Office or the domestic branch opening the RMB settlement account and the branch opening the foreign currency account will authorize agency overseas institutions to handle the RMB and foreign currency capital settlement according to the customer’s authorization. For non-one-stop service customers, the Head Office or the domestic branch opening the RMB settlement account and the branch opening the foreign currency account will handle relevant fund settlement according to the customer fund liquidation order. Otherwise, the customer will handle the liquidation by itself.
VII. Business Case After RMB joins the SDR in October 2016, the need of overseas central bank institutions for RMB asset configuration has had a significant increase. A central bank agency A contacted ICBC and expressed its need to enter the Chinese interbank foreign exchange market. After sufficient preparation, the Bank signed the agency foreign exchange trading agreement with the customer and assisted it in signing relevant documents for market entry and opening the trading account in CFETS. Under our help, the overseas institution successfully entered the interbank foreign exchange market. During the trading, the Bank employed our strong market-making capabilities, made active quotation and assisted the customer in reaching the first trading in the interbank foreign exchange market and satisfying the need for risk hedging and capital exchange. In January 2018, an overseas fund company B investing in China’s interbank bond market through ICBC’s agency interest rate trading and settlement services contacted the Bank, hoping to conduct the OTC foreign exchange trading services through the Bank to hedge against the currency risks arising from the investment in Chinese bond market. After opening the customer’s special foreign exchange account and signing relevant agreements, the customer successfully reached the OTC foreign exchange derivatives trading and completed the hedging of the exchange rate risk under its investment in the inter-bank bond market.
VIII. Risk Prompt The exchange rate may have unfavorable fluctuation due to domestic and overseas political and economic factors and other emergencies. The customer may suffer possible losses in foreign currency trading and thus should pay attention to the price changes in market and conduct trading prudently. Apart from market risks, customers should also pay attention to possible policy risks, liquidity risks, operational risks, force majeure, emergencies risks, and other contingent risks in foreign currency trading. Please read carefully relevant notices in the product introduction and business agreement.
Note: The information provided on this page is for reference only. Concrete business shall be subject to the announcement and provisions of the local outlet.