LeapRate Exclusive… The People’s Bank of China, effectively China’s central banking authority, has posted a notice on its website providing further warnings that it is planning to take measures to shut down what it terms illegal FX brokerage activity targeting China-based Retail FX traders.
The notice, which also officially comes from the Ministry of Public Security and financial regulator State Administration of Foreign Exchange (SAFE), states that Chinese authorities have not approved any institution to carry out or act as a foreign exchange deposit business, the PBoC’s term for leveraged forex trading services.
The PBoC also stated that it is an illegal act for any unauthorised institution to conduct foreign exchange deposit trading without authorization; It is also an offence for a unit or individual to entrust an unapproved institution to conduct foreign exchange deposit transactions (whether in foreign currency or RMB as a security deposit).
The notice by the PBoC and SAFE is the first one made since similar warnings made at the beginning of the year against foreign based FX brokers taking Chinese clients. Whether or not this is another ‘paper’ warning, or if Chinese regulatory authorities actually plan to take action against those looking to operate in the country (or take Chinese-based business from outside of China) remain to be seen.
The full warning issued by the PBoC can be seen here (in Chinese).