CMBC ranks among the first to win membership to trade on its own account in the gold futures of Shanghai Futures Exchange

2009-4-8

Since the beginning of 2008, the Derivatives Business Division filed for membership to trade on its own account in gold futures to Shanghai Futures Exchange (SFE). Recently CMBC, Industrial Bank of China, Bank of China and Industrial Bank Co., Ltd. were granted such right subject to approval from SFE. This indicates that CMBC is entitled to direct participation into gold futures of SFE, trade on its own account and business innovations in domestic gold futures. Commercial banks’ access to trade on its own account will improve the investors’ structure of China’s god futures market, fine-tune the investment rationale in gold future market and contribute to the growth o gold futures market.

Since CSBC gave the green light to the gold future on September 11,2007, the Derivatives Business Division of CMBC have taken the initiative to explore the channels and models available for commercial banks to participate into the gold futures market. In January 2008, the division took the listing of gold futures contract as an opportunity to prepare for the trading on its own account in the gold futures market by observing a principle entitled High Standard and Stable Startup. On the one hand, it kept a close eye on the relevant management rules that the regulator released on how commercial banks trade in domestic gold futures, and prepared application documents pursuant to the requirements of CMBC and SFE. On the other hand, it built on its own strength to do due diligence on the trading on its own account in domestic gold futures before a deep research into profitability model, risk control mechanism and product innovation and active preparation for technology, personnel and rules

Trading on its own account in domestic gold futures is the first strategic step to the futures trading as it gives us full access to domestic futures market. It will diversify our gold portfolio, provide a much easier hedging opportunity for our existing gold spot business and allow us to offer our clients more financial products with the prospect of new low-risk gold product to be designed based on the said hedging opportunity.

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