China Foreign Exchange Trade System

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China Foreign Exchange Trade System
Founded 1994
Headquarters Zhangjiang, Shanghai
Key People Pei ChuanZhi, President
Products RMB/ foreign currency spot trading, Foreign currency/ foreign currency spot trading, Foreign currency/foreign currency spot trading, RMB interbank lending, RMB bond trading
Website http://www.chinamoney.com.cn/english/

The China Foreign Exchange Trade System (CFETS) is the interbank trading and foreign exchange division of China's central bank.

CFETS, founded on April 18, 1994, is run by the People's Bank of China (PBC). Its core functions include: providing trading, information, benchmark and training facilities to the interbank lending, bond and FX markets, monitoring market transactions, providing services for the operation and transmission of the central bank's monetary policies, and engaging in other businesses authorized by the PBC. [1]

History

Approved by the authorities, foreign currency trading was formally introduced to the interbank foreign exchange market in China on May 18, 2005.

The CFETS said in May 2008 that it would launch trading centers for exchange rate swaps, currency swaps and forwards, focusing on the development of both the cash and derivatives products.[2]

CFETS plays a significant role in safeguarding RMB exchange rate stability, transmitting central bank monetary policies, serving financial institutions and supervising market operations. The system supports and organizes FX trading, RMB lending and bond trading, and interbank FX trading. It also handles settlement and clearing of FX trading, clearing of RMB lending and bond trading, and provides online commercial paper quotation system and information on the FX, bond and money markets.

In 2008, leaders of the CME and the China Foreign Exchange Trading System & National Interbank Funding Center (CFETS) announced that they had signed a Memorandum of Understanding (MOU). Under the MOU, CME and the CFETS agreed to create a forum for a continuous flow of information between the parties and for CME to provide advice, counsel, and expertise in the development of foreign exchange (FX) derivatives instruments for China.[3]

In December 2017, CFETS and NEX Group partnered to launch phase one of a new trading platform for the Chinese foreign exchange market. The new platform, called "CFETS FX 2017" featured a central limit order book (CLOB), for anonymous trading on the Chinese FX market. In February 2018, both announced the launch of phase two, a relationship-based platform for Chinese renminbi trading of spot, forwards and swaps, based on NEX Group's EBS trading platform. On day one, 480 firms logged into the system with 307 institutions executing deals, and notional turnover valued at $62.8 billion. The trading platform is significant because it marks the expansion of China's domestic renminbi market.[4]

Chronology

April 1994 - The CFETS was established according to the strategic plan of the People's Bank of China and State Administration of Foreign Exchange, implemented "multiple technological means and trading patterns to meet market demands of various levels[5]."

April 4, 1994 - The CFETS introduced a foreign exchange trading system for USD/RMB

April 5, 1994 - HKD/RMB trading started

March 1, 1995 - JPY/RMB trading started

January 3, 1996 - RMB credit lending system started operations through the CFETS

June 1997 - interbank bond trading started

July 2001 - the pilot program for RMB voice broking was introduced

June 1, 2002 - foreign exchange deposit broking services started

April 1, 2002 - EUR/RMB trading started

June 30, 2003 - the paper quotation system was introduced through www.chinacp.com.cn.

May 18, 2005 - Pairs trading for 8 foreign currencies was introduced

August 15, 2005 - RMB/FX forward trading was introduced

April 4, 2006 - Interbank FX swap was introduced

June 15, 2005 - interbank bond forward trading was introduced

December 2017 - CFETS launches phase one of FX2017, the domestic FX platform

February 2018 - Launch of phase two of FX2017, with spot, forwards and swaps trading

Structure

CFETS is headquartered in Shanghai, with a backup center in Beijing and sub-centers in Guangzhou, Shenzhen, Tianjin, Jinan, Dalian, Nanjing, Xiamen, Qingdao, Wuhan, Chongqing, Chengdu, Zhuhai, Shantou, Fuzhou, Ningbo, Xi'an, Shenyang, and Haikou.

Products and Services

Key People

Pei ChuanZhi, President
Ying Zhaoxiang, Inspector General
Zhang Yi, Executive Vice President
Xu Zaiyue, Executive Vice President
Sun Jie, Executive Vice President
Wang Hongbo, Executive Vice President

References

  1. Brief Introduction. CFETS.
  2. Cicada Signs China Foreign Exchange Trade System. SINA.
  3. Press Release. CME Group.
  4. CFETS launches platform for FX trading in China. Financial Technologies Forum.
  5. Important Events. China Foreign Exchange Trading System & National Interbank Funding Center.