Sunday, March 22, 2009

New Master Agreement for Financial Derivatives in China (March 18, 2009) -- 中国银行间市场金融衍生产品交易主协议(2009年版)

by M. Ulric Killion  

Photo/Chinese Firm Refuses To Pay Goldman $80 Million For Bad Derivatives Bets, Business Insider, December 29, 2009. 

According to Reuters, a Goldman subsidiary, J. Aron and Company, says that Shenzhen Nanshan Power owes them $80 million. But Shenzhen Power is refusing to pay. They say that J. Aron is trying to collect $80 million in terminated oil option contract fees and losses, but the contracts were signed without company approval. This is not the first time this year that the enforcement of derivatives contracts has become an issue in China, and from the sound of it it will probably grow as local officials are forced to adjudicate between homegrown companies and the international croupiers looking to do business there; Business Insider.

“On March 16, 2009, the China Interbank Market Financial Derivatives Master Agreement (2009 version) (NAFMII Master Agreement (2009 version)) as well as a relevant notice (NAFMII Notice (No.5)) by the National Association of Financial Market Institutional Investors (NAFMII) was released. This is the latest step by the Chinese authorities to regulate and further support the development of the financial derivatives market in China.”

The NAFMII Master Agreement (2009 version) provides a uniform documentation approach for interbank market participants involved in financial derivatives transactions. It was made effective from March  16, 2009, with a 6 month transitional period. . . .
“The NAFMII Master Agreement (2009 version) was formally adopted by a notice (PBOC Notice (No.4)), dated March 11, 2009, issued by the People’s Bank of China (PBOC), which confirmed that PBOC and the State Administration of Foreign Exchange (SAFE) had approved the promulgation of the NAFMII Master Agreement (2009 version). . . . 

While the NAFMII Master Agreement (2007 version) and CFETS Master Agreement have been well received in the market, the cross-over between the two master agreements has given rise to a range of technical and legal issues, particularly in relation to the single agreement and close-out netting arrangements. The NAFMII Master Agreement (2009 version) goes a long way to addressing those concerns.  .  .  .;

Read the full text of the NAFMII Master Agreement (2009 version) or  中国银行间市场金融衍生产品交易主协议(2009年版)文本 here:

备案地址: 北京市西城区金融街28号盈泰中心2号楼6层中国银行间市场交易商协会交易规范部
联 系 人:刘芳菲
传 真:010-66539028

Read the People’s Bank of China Notice No. 4 --  中国人民银行公告〔2009〕第4号 here.

National Association of Financial Market Institutional Investors -- 中国银行间市场交易商协会.
People’s Bank of China -- 中国人民银行.

Copyright © Protected - All Rights Reserved M. Ulric Killion, 2009.

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