Regulatory Alerts2010-09-03
Added · Updated
HKMA Circular Regarding SFC Guidance on Potential Listing of RMB Denominated Products
The Hong Kong Monetary Authority issued this circular to draw the attention of all Authorized Institutions to a Securities and Futures Commission notice regarding the potential listing of Renminbi-denominated products. The document requires intermediaries to prepare for trading and settlement operations while implementing proper internal controls and system changes. It further clarifies that while RMB lending to corporate customers is permitted, lending to personal customers and Designated Business Customers remains prohibited to prevent circumvention of regulatory restrictions.
HONG KONG MONETARY AUTHORITY *~~mifflfflµu Banking Conduct Department Our Ref: Bl/15C G16/1C 3 September 2010 The Chief Executive All Authorized Institutions Dear Sir / Madam, Circular Issued by the Securities and Futures Commission (SFC) Regarding Potential Listing of Products Denominated in Renminbi (RMB) I am writing to draw your attention to a circular issued by the SFC on 31 August 2010 ("the SFC Circular"). The SFC Circular advises intermediaries to ensure their readiness for future launches of listed RMB denominated products. Intermediaries are reminded to make necessary preparations for trading and settlement of such products. A copy of the SFC Circular is attached at Annex. Authorized institutions (Als) that plan to engage in the trading and settlement of listed RMB denominated products should implement proper internal controls and necessary operational and system changes. In addition, Als that plan to provide customers with RMB loan facilities to facilitate the latter's investment in such products are reminded that RMB lending to personal customers and Designated Business Customers (DBCs) is currently not permissible'. While Als are permitted to extend RMB loans to corporate customers including other financial intermediaries, they should take reasonable steps to ascertain that such loans will not in tum be lent by the corporate customers concerned to personal customers and DBCs, i.e. Ais should not knowingly lend to corporate customers in an arrangement to circumvent the said requirement. Yours faithfully, Meena Datwani Executive Director (Banking Conduct) Encl. c.c. SFC (Attn: Mr Stephen Po, Senior Director of Intermediaries Supervision) 1 For more information on the restriction on RMB lending, refer to item 13 of the Frequently Asked Questions attached to the HKMA circular "Renminbi Business in Hong Kong" dated 19 July 2010. For the meaning of DBCs, refer to the HKMA circular "Personal Renminbi Business in Hong Kong" dated 13 December 2005. 55th Floor, Two International Finance Centre, 8 Finance Street, Central, Hong Kong Tel: (852) 2878 8100 Fax: '(852) 2878 2100 E-mail: Meena_Datwani@hkma.gov.hk Website: www.hkma.gov.hk w m 9" Iiit ~ i'M1!:r8 !I..~ Iii ~ 11iP. 9" ,t,,2 :Wl 55tl "it ~ii : (852) 2878 8100 1$ A: (852) 2878 2100 it 11!~ : Meena_Datwani@hkma.gov.hk !,liJ ±.tl: : www.hkma.gov.hk