Laws of the People's Republic of China

Circular of the State Administration of Foreign Exchange on Relevant Issues concerning Domestic Designated Foreign Exchange Banks' Handling the Business of South Korean Won Conversion according to Quoted Foreign Exchange Rates

Hui Fa [2006] No. 45 August 30, 2006

Branch Bureaus and Departments of Foreign Exchange Control of the State Administration of Foreign Exchange in all provinces, autonomous regions, and municipalities directly under the Central Government, Branch Bureaus of the State Administration of Foreign Exchange in the cities of Shenzhen, Dalian, Qingdao, Xiamen and Ningbo, and all Chinese-funded designated foreign exchange banks:

In order to promote the economic and trade contacts between China and South Korea, to regulate the conversion of South Korean Won, and to safeguard the order in the foreign exchange market, and in accordance with the provisions in the Circular of the People's Bank of China on Further Improving the Administration of Trading Prices in the Inter-bank Foreign Exchange Market and Quoted Foreign Exchange Rates of Designated Foreign Exchange Banks (Yin Fa [2005] No. 250), a circular is hereby given on relevant issues concerning domestic banks' handling the business of South Korean Won conversion according to quoted foreign exchange rates as follows:

Article 1

All designated foreign exchange banks may, in accordance with the development needs and risk management capacities of their own and, decide themselves the handling of South Korean Won conversion according to quoted foreign exchange rates (including spot foreign exchange and cash) for their clients.

Article 2

The State Administration of Foreign Exchange shall conduct an administration of record on designated foreign exchange banks' handling South Korean Won according to quoted foreign exchange rates. Policy-related banks and nationwide commercial banks, when handling the business of South Korean Won conversion according to quoted foreign exchange rates, shall go through at the same time the formalities of record at the State Administration of Foreign Exchange, to which the performances of this business shall be submitted within the last 15 work days of each quarter. Urban commercial banks, rural commercial banks, rural cooperative financial institutions and foreign-funded banks, when handling the business of South Korean Won conversion according to quoted foreign exchange rates, shall go through at the same time the formalities of record at the local Branch Bureaus (Departments of Foreign Exchange Control) of the State Administration of Foreign Exchange, and submit to them the performances of this business within the last 10 work days of each quarter.

Article 3

Designated foreign exchange banks may decide themselves the trading prices of South Korean Won (spot foreign exchange and cash) against the Renminbi according to the quoted foreign exchange rates to their clients, and may also directly negotiate trading prices with their clients.

Article 4

This Circular shall come into force as of the date of issuance. All Branch Bureaus, after receiving this Circular, shall immediately transmit it to the urban commercial banks, rural commercial banks, rural cooperative financial institutions and foreign-funded banks within the jurisdictions of their own.