On 6 June 2008, the China Banking Regulatory Commission (CBRC) released the Circular on Matters Concerning the Development of Foreign Exchange Margin Trading by Financial Institutions in the Banking Sector (the “Circular”).

The CBRC plans to draft regulations to manage foreign exchange margin trading conducted by financial institutions in the banking sector. Before the issuance of the relevant regulations, banking and financial institutions must not set up any foreign exchange margin trade business or conduct such businesses in disguised forms.

Financial institutions which have already engaged in such trading before the issuance of the Circular are not allowed to accept new clients or carry out new trades for existing clients. Meanwhile, these financial institutions are required to submit written reports to CBRC within five days after the issuance of the Circular on the number of clients engaged in such trading, the total value of margin trades, the total value in positions, the general position of profits and losses of clients, and the relevant risk management measures which have been adopted.

For more information, please refer to CBRC Circular No. 100 of 2008, http://www.cbrc.gov.cn/chinese/home/jsp/docView.jsp?docID=20080612C7D4B44732A00844FFCA88135D818500