Reform of CMBC Business Department Drove Financial Market Business Boom

2007-10-19

CMBC is one of the first commercial banks that acquiring the bond market maker qualification. In recent years, its bond business has always progressed steadily. Since its entry to the inter-bank bond market, it has been honored as the Top 100 in national inter-bank bond market. CMBC is the Class A broker in open market operation of the Central Bank, member of the Class A underwriting group of book-entry treasure bond, and won the title of excellent underwriters of government bonds and financial bonds. CMBC also engages in the bond settlement agency business pretty early. It has always ranked top among peers in terms of the customer number of bond settlement agency business and the trading volume. With the increase of trading tools in the market, CMBC has successively launched bond buyout repo., future transaction, interest swap, bond lending and borrowing businesses, and accumulated precious experiences in these fields. It is also one of the few banks that have the qualification to issue financial bonds, subordinated bonds and mixed capital bonds at the national inter-bank bond market. On July 4, 2007, the National Inter-bank Funding Center issued a Circular on Carrying out Shibor-based Instrument Business and Interest Rate Swap Quotation. After active preparation, CMBC acquired the qualification for SHIBOR-based interest rate swap quotation. The qualification of SHIBOR-based interest rate swap quotation is an important qualification of our bank in interest rate swap field. The acquisition of this qualification will further boost the influence of CMBC in interest rate swap field, and pave solid foundation for the development of RMB derivative business. Besides, at the beginning of the year, after the People’s Bank of China approved our application on providing the OTC transaction of book-entry treasury bonds, we grasped the opportunity to set up the book-entry treasury bond OTC system development team, and passed the system acceptance and test organized by China Government Securities Depository Trust& Clearing Co., Ltd. under the authorization of the People’s Bank of China and the Ministry of Finance in August. It is anticipated that this business will initiate officially in our bank of three other underwriters with the approval of the People’s Bank of China and the Ministry of Finance in November.
Besides, CMBC became the inter-bank foreign exchange market maker at the end of 2006, one of the 21 foreign exchange market makers approved by the State Administration of Foreign Exchange. On July 30, 2007, the inter-bank foreign exchange trade system (Phase I) developed by the Trade Center of the Financial Market Dept. was launched successfully; meanwhile, in order to improve the quote capability, CMBC also carried out a series of developments for the new system.
Question: currently, investment varieties become increasingly abundant in the market, what approaches and indicators will CMBC use to measure the market risk? And how to control it?
Yan Junwei: the risk management level over the financial market businesses determines the development space of financial market businesses. With the progress of the business department reform, while vigorously developing the financial market businesses, we have attached great importance to risk management, and improved the risk identification, measure, monitoring and analysis level under the new market risk control framework by actively perfecting the market risk management framework, setting up sound market risk management system, strengthening the construction of market risk management system and enhancing the market risk management work at various procedures, which have offered powerful guarantee to the development of financial market businesses.

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