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In order to normalize foreign exchange payment and collection of State-owned Enterprise (SOE) for their overseas futures hedging transaction, and perfect foreign exchange administration, these operational procedures have been formulated according to Circular on Several Issues Concerning SOE's Overseas Futures Hedging Transaction. I. Registration (1) SOE with license of overseas futures business issued by CSRC and annual exposure ceiling of overseas futures transaction ratified by CSRC (hereinafter "Enterprise") shall register at SAFE before the end of March of each year with following materials: a. Application, registration form of basic information; b. Approval document of annual exposure ceiling of overseas futures transaction (hereinafter "annual exposure ceiling) of current year by CSRC; c. License of overseas futures business issued by CSRC; d. Business license issued by the administration of industry and commerce; and e. Other materials required by SAFE. (2) After verifying materials submitted by the Enterprise authentic and correct, SAFE shall go through the formalities of registration and confirm the annual exposure ceiling. II. Administration of foreign exchange account Foreign exchange account for futures transaction shall be opened with the approval of SAFE. (1) Domestic foreign exchange account a. For opening a domestic futures foreign exchange account (hereinafter "domestic futures account"), the Enterprise shall submit an application report to SAFE. b. The bank opening domestic futures account for the Enterprise shall meet the following requirements: (a) Headquarter of foreign exchange designated bank located in Beijing; (b) Outward remittance can reach its destination by the end of the next day; (c) Promise to fulfill obligations according to regulations on the administration of futures, including: verifying the authenticity of vouchers; making outward remittance within annual exposure ceiling; keeping a case-by-case record of remittance and reporting to SAFE as required, and taking supervision and inspection of SAFE. c. Qualified domestic bank shall open domestic futures account with the confirmation of annual exposure ceiling and approval document of opening account issued by SAFE. Each Enterprise can open only one domestic futures account. d. For transferring foreign exchange from other account (hereinafter "original account") to domestic futures account for overseas futures transaction, the Enterprise shall apply at the same department of SAFE as that has approved the original account for extending the outgoing scope of this account with the confirmation of annual exposure ceiling and approval document of opening the futures account. The approval shall act as a supporting document for the foreign exchange transfer. e. Foreign exchange inflows and outflows for overseas futures transaction shall go through domestic futures account. The Enterprise and the bank shall make foreign exchange collection and payment strictly according to incoming and out-going scope of the account. Domestic futures account shall only be credited with inward transfers of the Enterprise's self-owned or purchased foreign exchange that will be remitted abroad for paying futures margin or indemnity, and profits from overseas futures transaction. The account shall only be debited with payment of futures margin or indemnity, brokerage, and banking charges. f. The bank shall verify the authenticity of following documents when making outward remittance for the Enterprise's overseas futures transactions: (a) Confirmation of annual exposure ceiling issued by SAFE; (b) Payment notice of primary margin, supplementary margin or indemnity issued by overseas futures broker. The bank can only remit foreign exchange within the annual exposure ceiling overseas after verifying abovementioned documents authentic and correct. The remittance shall be recorded case-by-case. Futures margin and indemnity shall be covered firstly by the Enterprise's own foreign exchange. The shortage can be supplemented by purchased foreign exchange. In case that transfer from the Enterprise's original account to domestic futures account is needed, the bank shall make the transfer with approval document of extending the out-going scope of original account issued by SAFE. Transferred foreign exchange shall be remitted to overseas by the end of the next day. Purchased foreign exchange shall be remitted to overseas on the same day of the purchase. Special case of outward remittance shall be approved by SAFE. g. Profits from futures transactions shall be repatriated and deposited with domestic futures account without delay. Repatriated foreign exchange shall be sold to the bank on the same day. The bank shall record the repatriation and sale case-by-case. The amount of repatriated foreign exchange shall act as a major evidence for the annual exposure ceiling or the coming year. h. After opening the domestic futures account and extending the out-going scope of the original account, the Enterprise shall report it to SAFE within 15 days. (2) Overseas foreign exchange account a. When applying for opening an overseas foreign exchange account at SAFE, the Enterprise shall submit following materials: (a) Application; and (b) License of overseas futures business issued by CSRC. b. Overseas futures margin account can only be opened at futures brokers authorized by CSRC. Only after acquiring confirmation of annual exposure ceiling and approval of opening the account issued by SAFE can the Enterprise open futures margin account at overseas futures broker. The number of overseas account shall be determined by SAFE consulting with CSRC. c. Overseas futures margin account can only be credited and debited with in-comings and out-going s related to futures transactions authorized by CSRC. Foreign exchange transfers for overseas futures transaction can only be made through domestic futures account and overseas futures margin account approved by SAFE. d. After opening the overseas futures margin account, the Enterprise shall report it to SAFE in one month. III. Verification of import payment and export collection Spot delivery of futures transaction shall be subject to verification of import payment and export collection as ordinary foreign trade. IV. BOP report. The Enterprise and concerned bank shall make BOP report according to Procedures on BOP Statistics and relevant regulations. V. Feedback of information Domestic bank shall submit Statement of Overseas Futures Capital Flows to SAFE within the first 10 working days of each month. The Enterprise shall submit Brief Statement of Overseas Futures Capital Flows and money position statement (account statement) of corresponding overseas futures broker to SAFE within the first 10 working days of each month. Besides hard copies of these statements, diskettes shall be submitted to SAFE too. The Enterprise shall submit a written report on the futures exposure, profit and loss of futures and concerned spot transactions in the past half-year to SAFE within the first 10 working days of each July and January. SAFE and CSRC shall make a double check on a half-yearly basis. VI. This operational procedure shall take into effect as of promulgation. |
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