Newsletter
CENTRAL BANK OF CHINA TO IMPLEMENT DESIGNATED TRADER SYSTEM
The Central Bank of China (CBC) plans to implement a designated trader system and to accept and examine trader applications at any time.
Under the designated trader system, only financial institutions approved as designated traders may participate when the CBC engages in open market operations, such as repo on bills. Other financial institutions, however, will not be restricted from participation when the CBC issues negotiable certificates of deposit.
The CBC has not promulgated the regulations for the selection of designated traders. Nevertheless, the CBC announced on a preliminary basis, that financial institutions with paid-in capital of at least NT$10 billion, after-tax net profit and no accumulated losses in the most recent year and good credit ratings may apply with the CBC for being designated traders. Most market watchers believe that existing financial institutions holding large position of governmental bonds, treasury bills and negotiable certificates of deposit will be most likely designated.