金融机构衍生产品交易业务管理暂行办法 Order of the China Banking Regulatory Commission

the present Measures.

　　Article 12 Legal person in the territory of China shall strictly examine the capability of risk control of its agencies in authorizing them to operate the derivative product transactions and make formal written documents of authorization concerning type of derivative product transactions and limitation. The agencies shall operate the derivative product transactions unifiedly through their headquarters' real-time system， and their headquarters shall run inventory adjusting， risk exposure operation and risk control as a whole.

　　The aforesaid agencies shall report to the local Banking Regulatory Bureau within 30 days after the receipt of authorization or authorization-altering documents from headquarter with aforesaid documents.

　　Chapter III Risk Management

　　Article 13 Financial institutions shall， according to its own characteristic of operating target， assets scale， managing ability and risk of the derivative product transactions， make sure the capability of running the derivative product transactions and confirm the type and scale of the derivative product transactions.

　　Article 14 Financial institutions shall， according to the classification of Article 4， set up the sound systems of risk control， internal control and operation corresponding to the type， scale and complexity of the operating derivative product transactions.

　　Article 15 Higher executives of financial institutions shall know the risk of the derivative product transactions， comprehensive management framework involving principles， procedure， organization and power limitation of auditing， approving and evaluating the operation and risk control of the derivative product transactions and shall be capable of acquiring information on the derivative product transactions through independent risk control departments and sound examining and reporting system and giving corresponding supervision and guidance.

　　Article 16 Higher executives of the financial institutions shall decide the calculating method and index of risk exposure of the derivative product transactions that is adaptive to the operation of their ins

titutions， and shall make， regularly checkup and update the system of risk exposure limit， loss limit and emergency solution according to the comprehensive ability， owned assets， profitability， operation policy and estimation of market. Higher executive also shall make supervision and control procedure of limitations. Higher executives of the financial institutions in charge of operating the derivative product transactions and of risk control shall be divided separately.

　　Article 17 Financial institutions shall make clear criteria of working certificate of traders， analyzers and other staff and arrange training for the salesman and other operating staff according to the complexity of the derivative product transactions so as to ensure they have efficient skill and competency.

　　Article 18 Financial institutions shall make sound policy of evaluating the other party of the derivative product transactions， including whether the other party thoroughly understand the contract and the responsibility of perform it， whether the derivative product transactions meet the real target of the other party and the evaluation of credit risk of the other party.

　　Financial institutions shall make special provisions on the qualification of the other party under the circumstance of high-risk derivative product transactions type.

　　Financial institutions may reasonably rely on the formal written documents provided by the other party according to the principle of good faith in performing the present Article.

　　Article 19 Financial institution shall explain the risk of the derivative product transactions to the institution or individual in operating the derivative product transactions for them and shall get the confirmation letter from them so as to confirm that they have understand and have the ability to bear the risk.

　　The information exposed to the institution or individual by the banking institution shall at least involve following contents，

　　（1） Content and risk summary of the contract on the derivative product transactions，

　　（2） Important factors influencing potential loss of the derivative product.

　　Article 20 Financial institutions shall appropriately and reasonably use all kinds of risk buffer measures like guarantee to reduce the credit risk of the other party of the derivative product transactions， evaluate the credit risk by using appropriate method and model and apply corresponding risk control measures.

　　Article 21 Financial institutions shall evaluate market risk of the derivative product transactions by using appropriate evaluation method or model， handle the market risk according to the price principles， and adjust the operation scale， type and risk exposure level.

　　Article 22 Financial institutions shall make sound fluidity arrangements according to the scale and type of the derivative product transactions in order to ensure the sufficient performing ability under the unusual market circumstances.

　　Article 23 Financial institutions shall establish and amplify sound systems and mechanisms of operating risk control so as to strictly control the derivative product transactions risk.

　　Article 24 Financial institutions shall establish and amplify sound systems and mechanisms of legal risk control so as to strictly examine the transacting qualification and legal status. Financial institutions shall， in signing the contract of the derivative product transactions consult， refer to the legal documents world widely adapted， thoroughly consider factors like feasibility of demanding and saving from damage on account of breaking a contract by using legal measures and take effective means to prevent legal risk in drafting out transactions contract， negotiating and concluding， etc.

　　Article 25 Financial institutions shall submit accounting statement， statistic statement and other related reports of the derivative product tran

sactions to CBRC according to the provisions promulgated by CBRC.

　　Financial institutions shall disclose risk situation， loss situation， profit change and other unusual situation of the derivative product transactions according to the provisions on information exposing promulgated by CBRC.

　　Article 26 CBRC have the privilege of inspecting materials and statements of the derivative product transactions from financial institutions at any time and of inspecting regularly whether the risk control system， internal control system and operation system of the financial institutions adapt the type of derivative product transactions they operate.

　　Article 27 Financial institutions shall timely and actively report to CBRC and submit corresponding solution under the circumstance of existing big operation risk or tremendous loss in running the derivative product transactions.

　　Financial institutions shall timely and actively report detailed information to CBRC under the circumstance of important change of operation， executive system or risk control of the derivative product transactions.

　　Financial institutions shall simultaneously send a copy to the State Administration of Foreign Exchange in the case that the aforesaid matters related to the foreign exchange administration and external payment.

　　Article 28 Financial institutions shall properly conserve all the operation documents and documents， accounting books， original evidences， telephone record and other materials of the derivative product transactions. Telephone record shall be conserved for more than half one year， and other materials shall be reserved for 3 years after the maturity of the contract for the purpose of examination. The special provisions of accounting prevail.

　　Chapter IV Penalty Provisions

　　Article 29 Where the traders of the derivative product transactions in the financial institutions violate these Measures or relevant provisions of the institution resulting in heavy economic losses to the institution or the clients， financial institutions thereof shall give the directly responsible higher executives and other governor and directly liable persons the penalty of demerit to expel. Those who violate the Criminal law shall be transmitted to judiciary departments to investigate and affix criminal responsibility.

　　Article 30 Financial institutions that operate the derivative product transactions without permission of CBRC shall be given penalty by CBRC according to Measures on Punishing Illegal Activity in Financing.

　　Non-financing institutions that violate these Measures and provide service of the derivative product transactions to the clients shall be clamped down by CBRC and the illegal profit shall be confiscated by CBRC. Those violate criminal law shall be transmitted to judiciary departments to investigate and affix criminal responsibility.

　　Article 31 CBRC shall respectively give penalty to the financial institutions that do not submit relevant statements， materials or that do not expose related information according to the character of the institutions and Banking Supervision Law of People's Republic of China， Commercial Bank Law of People's Republic of China， Regulations on Administration of Foreign-funded Financial institutions of People's Republic of China and other relevant laws， regulations and financial regulations.

　　CBRC shall give penalty to the financial institutions that provide fake information of the derivative product transactions or disguise important information of the derivative product transactions according to Measures on Punishin

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