Reforms of Foreign Exchange Rules on Cross-border Security

Authored by Ren Gulong (rengulong@anjielaw.com) at AnJie Law Firm

After several months’ consultation, State Administration of Foreign Exchange (SAFE) released a Foreign Exchange Rules On Administration Of Cross-border Security (the “Cross-border Security Rules”) on 19 May, which will become effective on 1 June 2014.  The Cross-border Security Rules will dramatically relax regulations on Cross-border Security by removing all up-front approvals to the effect that FX/RMB will be fully convertible in respect of Cross-border Security.

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China Will Open Up Bank Cards Clearing Markets

Authored by Ren Gulong (rengulong@anjielaw.com) at AnJie Law Firm

On 29 October 2014, the State Council decided to open the bank-card clearing business to both domestic and foreign investors in an effort to expand the opening up in financial sector, to promote payment innovation and to optimize consumption environment.

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New ISDA Protocol - Action to Facilitate Cross-Border Resolution Efforts

Authored by Ren Gulong (rengulong@anjielaw.com) at AnJie Law Firm

On October 11, 2014, The International Swaps and Derivatives Association (ISDA) announced that 18 major global banks have agreed to sign a new ISDA Resolution Stay Protocol (the “Protocol”). The Protocol has been developed in coordination with the Financial Stability Board to support cross-border resolution and reduce systemic risk.

 

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Proposed SAFE Reform Will Substantially Eliminate Restrictions On Cross-border Security

Authored by Ren Gulong (rengulong@anjielaw.com)

On 13 February 2014, State Administration of Foreign Exchange (SAFE) released a consultation paper on Foreign Exchange Rules On Administration Of Cross-border Security (the “Consultation Paper”).  It is proposed in the Consultation Paper that restrictions on Cross-border Security will be dramatically relaxed so that FX/RMB will be fully convertible in respect of Cross-border Security.  This is a significant reform in pace with Chinese Government’s streamlining administration and institute decentralization and opening up of capital account transactions.

Cross-border Security refers to (a) provision of security by a PRC entity in favor of an offshore entity in an offshore financing transaction (“Outbound Security”); or (b) provision of security by an offshore entity in favor of a PRC entity in PRC financing transactions (“Offshore Security”).  The Consultation Paper penciled the following reforms:

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