SASAC publishes new circular for financial derivatives by Chinese state-owned enterprises

Trading derivatives with enterprises owned by the Chinese central government (“Central SOEs”) has been a key focus for many international houses since there are nearly 100 Central SOE groups in Mainland China, with tens of thousands of affiliates and a whopping annual business income of over RMB30 trillion in 2019. Informed market participants would recall various regulatory measures on the conduct of derivatives transactions by these Central SOEs in the last decade including the clamp down following the global financial crisis and the subsequent liberalisation in 2013.

We discuss in this bulletin a recent circular: The Circular on Pragmatically Strengthening Financial Derivative Business Management (《关于切实加强金融衍生业务管理有关事项的通知》) issued by the State-owned Assets Supervision and Administration Commission of the State Council on 20 January 2020 and its impact on trading financial derivatives by Central SOEs.

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