The derivatives framework enables banks to trade derivatives on their own accounts for profit – previously they were only allowed to use them to hedge. Banks may also now target corporate customers. Previously, they could only offer them to other banks.
As the renminbi is not convertible on the capital account, banks that receive approval are limited to foreign currency-denominated derivatives products. They must also comply with existing regulations from other financial regulatory bodies such as the China Securities Regulatory Commission.
A spokesperson for CSFB declined to comment on what products the bank will sell, saying it has submitted a proposal to the CBRC. "We now get in-principle approval from the CBRC to engage in derivatives but we have to re-submit the plan for the product we intend to sell to Chinese clients, to the CBRC," said the spokesperson.
Under the rules, the bank can engage in interest rates, foreign exchange and credit derivatives products.
Paul Calello, chairman and chief executive officer for the Asia-Pacific at CSFB, said he envisaged demand for such products among government agencies, large domestic institutions, foreign and domestic corporates, and institutional investors.
CSFB will conduct its derivatives business in China through its Shanghai bank branch. The bank received approval from the People's Bank of China to engage in renminbi business in 1998.