Products trading summary

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FX derivatives

1. control in regulations

1.1 principle of actual need

  • materials that provide the background of its real need
  • if there is a change in FX risk exposure, FX investors shall accordingly adjust the FX derivatives' exposure held by them within 5 days
1.2 special FX account/exclusive 

  • should not be used for any purpose other than investment
  • fluctuations do not exceed 10%
  • fund remitted outward shall not exceed 110% of remitted inward
  • FX proceeds shall be included in FX profits for unified management, and may not be settled separately
1.3 master agreement

 1.4 data submission in a complete, accurate and timely manner


2. trading process flow

2.1 spot (general)

Before trade:
- KYC
- bank account opening
- provide supporting documents
  • business license
  • trade authority letter
  • copy of identity card, passport, etc
  • company approval
  • org chart
  • ...
  • annual financial report for the past 3 years for JPM review and FX line set up
  • master agreement: NAFMII/ISDA
  • trade authority letter/board resolution
- client define the future exposure need to be hedged, and ask for quotes

Trade day:

- written/oral trade instructions via phone or email
- sales send deal confirmation to recap the deal details by email
- clients sign back application form (soft copy & hard/original copy)
- back office verifies trade details by callback
- check the front-end system to see whether all deals have been captured in the - risk management system
- (amendment/cancellation)

After trade (settlement day):
- trades estimate/sign the pnl for the day and report all overnight positions 
- client put sufficient fund in the bank
- give settlement instructions
- outward payment

note: credit line is not required for spot trade

2.2 forward

- accounts can be opened after forward deals done, but must before settlement
- credit line: need the hedging cashflow forecast to determine how much FX lines are needed
- in China, basically the forward trade needs to be physically settled; rollover or unwind deals are not encouraged by local regulators. 

2.3 swap

2.4 CCS

book trade: kapital

trade feed into STS for ops processing as per BAU

settlement:
- all CNY payments settled via CNAPS
- non-CNY for interbanks and corporate clients settled via SWIFT
- corporates: DDA account with JPM
- confirmation: drafted and tracked in STS

back office systems:
- market risk: kapital feed VARs
- credit risk: kapital feed globalnet, DAC
- accounting: STS feed OGL

2.5 options

key initiatives

1. type A

- set up LIB as an agency bank
- license transfer from CEM to GC
- enrich products through Type A

  • FX derivatives
  • bond derivatives: repo/IRS

- JPM inter affiliates access CIBM through LIB as an agent

2. bond connect

- set up LIB as a qualified dealer
- July 3rd qualification arrived and completed the 1st deal
- JPM inter affiliates access CIBM through bond connect

  • JPMHK, JPMSA, JPMSAPL



FADP

1. monthly deck
- revenue
- pnl
- top client
- FX client volume
- key initiatives

2. LOC
- risk and control
- key initiatives

3. Financial Analysis
- LExLOB performance analysis
- EC deck comments/president report

4. BCP-work transfer

5. new book set up and LVT
- trade raise request
- fill template and get approval
- follow up book opening and coordinate LVT once complete
- request test detail from trader
- book trade and provide the screenshot
- stakeholder sign off
- LVT complete

6. regulatory filling
- SAFE
- PBOC
- CBRC

CEM

1. license

- market maker of interbank FX spot/swap/forward
- market maker of interbank bond market
- primary dealer of China government bond
- corporate bond underwriting license
- trading business of financial derivatives
- type A bond settlement license
- qualified market maker for bond connect

2. product

- FX
  • spot
  • swap
  • forward
  • CCS
  • FXO
- Rates
  • cash bond: NCD, government bond, Policy financial bond
  • IRS
  • CNY FRA
- FVL

- Exotics (Index/credit/interest rate)
  • PP SI
  • Non PP SI


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