China tightens rules on equity and foreign exchange derivatives.?


The People’s Bank of China (PBOC) will from next month require the holding of reserves for all purchases of foreign exchange derivatives, which will increase the cost of taking positions on the decline of the yuan, according to a document which Reuters was able to take. Know ledge.

In a similar document, seen by Reuters on Tuesday, the central bank said it wanted to require banks to build up reserves on behalf of their clients trading in forward currencies, a move seen as intended to curb speculation and volatility on the currency after its unexpected devaluation on August 11.

The severe turbulence caused by this decision on the financial markets prompted Beijing to try to limit its impact.

The People’s Bank of China has repeatedly set the yuan’s daily midpoint on the upside and increased the frequency of dollar selling by state-owned banks to support its currency, even going so far as a rare market intervention. eventually.

Some operators believe that the repeated interventions in the spot market and the new requirements to come in the derivatives markets constitute a step backwards compared to the ambitions of liberalization of the foreign exchange market in view of a greater internationalization of the yuan.

According to the BPC document consulted on Wednesday, the reserve requirement ratio would reach 20% on the nominal value of futures contracts and swap contracts and 10% on that of option contracts.


Contacted by Reuters, the BPC declined to comment.

Derivatives market operator China Financial Futures Exchange separately announced on Wednesday that it would take further steps to curb excessive speculation in stock index futures.

As of September 7 and for contracts not used as hedges, margin calls on futures contracts will be increased to 40% from 30%.

The China Securities Regulatory Commission (CSRC) said last week that margin calls on non-hedging contracts would be increased to 30% from August 31.

The announcement of the further increase in margin calls on index contracts came after a further lower close of Chinese stock markets on Wednesday. (Michelle Chen in Hong Kong and Shanghai Office, Marc Joanny for the French service, editing by Bertrand Boucey)

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