The China Banking and Insurance Regulatory Commission ("CBIRC") has recently issued the Circular on Further Regulating the Structured Deposit Business of Commercial Banks (the "Circular"), immediately effective from the date of issuance.
Major contents of the Circular include: defining the term "structured deposit" to draw a clear and strict line between structured deposits and ordinary deposits; calling on banks to prepare and implement corresponding risk management policies and procedures, and setting out requirements for accounting and management of structured deposits; requiring banks that intend to conduct the structured deposit business to obtain the business qualification for ordinary derivatives trading and comply with the relevant regulatory provisions in respect of derivatives trading; strengthening the sale of structured deposits in a legally compliant manner, by reference to the relevant provisions of the Measures for the Supervision and Administration of Wealth Management Business of Commercial Banks regarding the sale of wealth management products; reinforcing information disclosure to safeguard the lawful rights and interests of investors; and ramping up off-site supervision and on-site inspections, and taking regulatory measures or imposing administrative penalties in accordance with laws and regulations. The Circular also states that after the implementation of the Circular, a transition period will be established according to the principle of separating old rules from new ones, to ensure a smooth transition, adding that the transition period will last for 12 months from the effective date of the Circular.