On May 21, the Shanghai Head Office of the People's Bank of China ("PBC") issued two rules which are the Implementing Rules of the China (Shanghai) Pilot Free Trade Zone for Separate Accounting Business (for Trial Implementation) and the Rules of the China (Shanghai) Pilot Free Trade Zone for the Prudential Management of Risks Relating to Separate Accounting Business (for Trial Implementation).
The said rules specify that free trade accounts are domestic/foreign currency accounts which are subject to uniform rules and are opened in separate accounting units in the China (Shanghai) Pilot Free Trade Zone ("FTZ") according to customers' needs. Free trade accounts may be used for the handling of cross-border RMB settlements for items under current accounts or other innovative business in respect of investment, financing and currency conversion. Moreover, all subjects and foreign entities in the FTZ are allowed to open free trade accounts. In addition, according to the rules, all financial institutions in Shanghai are allowed to establish separate accounting units as required, that is, financial institutions allowed to establish separate accounting units are not limited to those in the FTZ or banking financial institutions.