OREANDA-NEWS. March 26, 2014. In cooperation with Shanghai Jiangxi Copper International Logistics Co., Ltd., Bank of China successfully underwrote the first deal of commodity derivatives for the Free Trade Zone, opening the channel for international commodity hedging business of the enterprises in the FTZ.

State Administration of Foreign Exchange Shanghai Office (SAFE Shanghai Office) recently issued the Notice for Printing and Distributing the Implementing Rules for Foreign Exchange Control of Supporting Free Trade Zone Construction.

The new policy involves document simplified, centralized exchange collection, payment and netting settlement, financial leasing rental collection under the current account as well as includes for FDI-related foreign exchange policy optimization, external guarantee, and external debt management under the capital account. The policy also releases appropriately the foreign-exchange market business involved in transaction of commodity derivatives and the banks can process the transaction of commodity derivatives and related foreign exchange settlement and sale services for the enterprises in the FTZ according to the relevant policies.

As the first transaction of commodity derivatives for the enterprises in the FTZ after the new policy is introduced, BOC and Shanghai Jiangxi Copper International Logistics Co., Ltd. conclude the three-month OTC forward contract with LME copper as the commodity object, for a total trade of 1000 tons in about 40 deals.

Jiangxi Copper Group is a super-big associated enterprise integrated copper mining, dressing, smelting and process in the Chinese non-ferrous industry as well as the biggest production base of copper production and the important source of sulfur chemical raw materials and gold and silver in China. Shanghai Jiangxi Copper International Logistics Co., Ltd. is the first company established by Jiangxi Copper Group in Shanghai Free Trade Zone for trading of commodities.

In recent years, by giving play to its international advantages, Bank of China has been actively exploring for globalized and professional financial services for bulk commodities. BOC has set up the commodity financing center in Singapore and Shanghai respectively as well as the special teams in London and New York. The subsidiary of BOC, BOC International becomes the first Chinese liquidation member of LME, CME, CBOT, NYMEX, COMEX and ICE Europe. In 2012, BOC Shanghai Branch successfully processed the first Yangshan futures bonded standard warehouse receipts financing for the enterprises and became a new highlight of commodity financing service in supporting the development of real economy.

As China(Shanghai) Free Trade Zone advances its reform and development, by taking advantage of its rich experience in commodity financing market and its service network spreading all over the world and giving further play to its group advantage to open the domestic and overseas markets, Bank of China will provide customers with comprehensive service solutions integrated with trade finance and hedging and effectively meet the different needs of enterprises for trade financing, capital settlement and price risk avoidance.