Won-yuan Direct Trading

Five local banks have come to have the right to set the price in the Chinese market.
Five local banks have come to have the right to set the price in the Chinese market.

 

Five Korean banks were selected as the market maker for the won-yuan direct trading market in China.

The Ministry of Strategy and Finance (MOSF) and the Bank of Korea (BOK) announced on June 21 that the China Foreign Exchange Trading System (CFETS) under the People's Bank of China chose 14 banks as the market maker of the won-yuan direct trading market in China.

The five Korean entities are KB Kookmin Bank, Shinhan Bank, Woori Bank, KEB Hana Bank’s Chinese operations, and Korea Development Bank’s Shanghai branch. This is the first time Korean banks have been named market makers in China’s foreign exchange market. The CFETS also included six Chinese banks – Bank of China, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of Communications and China Citic Bank – and three foreign banks – HSBC, Standard Chartered Bank and Citibank – in the list.

The market makers have the right to set the price in the Chinese market, and the exchange rate will be based on transactions between market maker banks. Non-market makers cannot set the price and can make transactions only at exchange rates presented by market makers.

An official from the MOSF said, “This is the first time Korean banks have been selected as market makers in China’s foreign exchange trade center. It will help activate the won-yuan direct trading market and strengthen the role of Korean banks in the Chinese foreign exchange and financial market.”

 

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