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New Regulations in China Specifically Target Derivatives Transactions

April 05, 2004

By Deming Zhao, David Sun and Eddie Siu-lung Law

The first major set of rules specifically designed to regulate derivatives activities in China entitled “Provisional Administrative Rules Governing Derivatives Activities of Financial Institutions” came into effect on March 1, 2004. The Rules, which were promulgated by the China Banking Regulatory Commission after two years of research and consultation, set out the market admission requirements, basic risk management and internal control standards that must be satisfied by qualifying financial institutions seeking to conduct derivatives activities in China.