Offshore CNY Cash&Trade

Working Group Meeting

24th Apr, 2014

2

Agenda

• RMB development in 2013 from SWIFT data - 15’

• CCC update - 15’

• Topics for discussion

Topic 1: Change of behaviour along with CNAPS2 - 25’

Topic 2: SH FTZ vs HK offshore RMB business - 25’

• SR2014 and potential update on Guidelines - 5’

• AOB - 5’

Offshore RMB traffic insights

RMB development in 2013

+ 8 positions as world payments

currency (most notably passing NZD and already in

2013 RUB)

RMB

Since

Jan

2013 (Jan to Dec 2013)

+ 69% in

payments

value

+ 58% in

payments

volume + 10% Countries

with in/out

payments (102)

+

20% Financial

Institutions (1382)

+ 5

positions as world payments

currency

4

Source: Watch

Payments value weight (MT103 and MT202 excl. CB)

Intra-Asia RMB trade settlement up 67% over 2013 Based on Intra-Asia MT700 underlying value

90% 79%

5% 18%

Jan. 2012 Sept. 2013

Top 5 Currencies Used for Intra Asia Trade Finance

Others

HKD

EUR

JPY

CNY

USD

Jan. 2012 Sept. 2013

0.36% 0.22%

0.31% 0.29%

0.81% 0.64%

3.55% 2.21%

4.64% 17.85%

90.34% 78.78%

USD

CNY

JPY

Renminbi grew 67%

compared to previous

YTD

YTD Growth

11%

67%

-19%

Source: SWIFT Watch

Domestic flows and central banks excluded.

Intra-Asia only.

5

Top countries(excl HK) RMB payment in 2013

2013 Total Payment

Sent& Received

(Million messages)

6 Source: SWIFT Watch

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

0% 100% 200% 300% 400% 500% 600% 700% 800%

United Kingdom

Singapore

Taiwan

France

United States

Australia

Luxembourg

Germany

Macau

2012-2013

Growth Rate

Sent

RMB Payments(MT103/202 excl cov)

RMB’s evolution with HK -- Hongkong as an RMB Payment centre

Received

0

50,000

100,000

150,000

200,000

250,000

0

50,000

100,000

150,000

200,000

250,000

Source: SWIFT Watch

Average

monthly

growth rate:

3%

Average

monthly

growth rate:

3%

RMB Payment flows in&out of Hong Kong

Ranking Based on total FIN 2013 - number of messages sent and received

1. Domestic

4. Taiwan

3. Singapore

2. UK

5. France

78%

5%

3% 2%

1% 1%

1% 1% 1% 1%

6%

Hong Kong

United Kingdom

Singapore

Taiwan

France

United States

Germany

Japan

China

Luxembourg

Others

Top partner countries of HK’s RMB Payment

Source: Watch

HK’s 2013 total RMB payment volume, sent and received

Growth figures: 2013 vs 2012

Live traffic

RMB sent and received in Trade messages (MT400/410/700/707)

RMB’s evolution with SG -- SG as an RMB Trade centre

0

200

400

600

800

1,000

1,200

Source: SWIFT Watch

Average

monthly

growth rate:

6%

RMB Payment flows in&out of Singapore

Ranking Based on total FIN 2013 - number of messages sent and received

1. Hongkong

4. Luxembourg

2. Domestic

3. China

5. Belgium

Top partner countries of SG’s RMB Payment

70%

20%

4%

2% 1%

1% 1% 0% 0% 0% 1% Hong Kong

Singapore

China

Luxembourg

Belgium

Macau

United Kingdom

Philippines

Sweden

Malaysia

Other

Source: Watch

SG’s 2013 total RMB payment volume, sent and received

Growth figures: 2013 vs 2012

Live traffic

RMB sent and received in Securities messages(MT5xx)

RMB’s evolution with Luxembourg -- Lux as an RMB Funds processing centre

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Average

monthly

growth rate:

4%

Source: SWIFT Watch

RMB Payment flows in&out of Luxembourg

Ranking Based on total FIN 2013 - number of messages sent and received

1. Hongkong

2. Singapore

3. Domestic

4. UK

5. Belgium

Top partner countries of LUX’s RMB Payment

78%

9%

3%

2%

2% 2%

1% 1% 1% 0% 1% Hong Kong

Singapore

Luxembourg

United Kingdom

Belgium

China

Switzerland

United States

Germany

Taiwan

Others

Source: Watch

Lux’s 2013 total RMB payment volume, sent and received

Growth figures: 2013 vs 2012

Live traffic

RMB sent and received in FX trade message(MT300/320)

RMB’s evolution with UK -- London as an RMB FX centre

0

200

400

600

800

1000

1200

Average

monthly

growth rate:

0.4%

Source: SWIFT Watch

RMB Payment flows in&out of UK

Ranking Based on total FIN 2013 - number of messages sent and received

1. HK

4. Germany

2. Domestic

5. US

3. Belgium

Top partner countries of UK’s RMB Payment

92%

2% 1% 1% 1% Hong Kong

United Kingdom

Belgium

Germany

United States

China

Singapore

Luxembourg

France

Switzerland

Others

Source: Watch

UK’s 2013 total RMB payment volume, sent and received

Growth figures: 2013 vs 2012

Live traffic

Significant evolvement in RMB offshore clearing

Hong Kong

the leader ~74% share

(BOC)

Thailand

Announced interest to

establish clearing bank

London

RMB clearing

bank coming

soon

China (CIPS)

New international

RMB clearing

system by 2015

Singapore

RMB clearing

(ICBC)

Luxembourg

Biggest RMB

liquidity pool in

Europe

Potential, or in progress

Shanghai Free Trade Zone

Piloting liberalisation of RMB

financial services

RMB “centres”

Taiwan

RMB clearing (BOC)

Macao

RMB clearing

(BOC)

Frankfurt

RMB clearing

bank coming soon

Laos

Local RMB

clearing (ICBC)

Malaysia

Local RMB

clearing (BOC)

Cambodia

Local RMB

clearing (BOC)

Philippines

Local RMB clearing

(BOC)

Moscow

Local RMB

clearing (BOC)

Implications to banks: • competitive

landscape changing

• more complexity in

back office operation

Australia

ASX & BOC

partnership for

RMB clearing

Established

15

CCC (Chinese commercial code)

update

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

CCC table launch plan

2013 Q1’14 Q2’14 Q3’14 Q4’14

17

CCC e-table publish on www.swift.com

Preparation of the CCC e-table (CCC group, SWIFT)

Finalize the governance document (CCC group, SWIFT)

Establish the CCC maintenance group

Collect market practice in how to use CCC in MTs and draft market practice

guidelines (CCC group)

SWIFT user group meetings to promote (HK, SG, TW, CN, MO, & others)

http://www.swift.com/

Chinese Commercial Code (CCC) update

Current status

- First version of CCC e-table is ready for publication

- CCC maintenance group was established and first consultation had

been sent to all members

- Established formal governance for CCC maintenance

- Maintenance group has members from 4 main Chinese banks, TW

FISC, CNY offshore clearing banks, SWIFT, and OSCNYWG

- Draft the best practice of CCC table usage for FIN messages

- Draft the best practice to present the name and address information in

relevant MT fields

- Awaiting one more delegate from OSCNYWG to participate at the

maintenance group

18

Chinese Commercial Code (CCC) update

19

Next steps

- Locate the web-site for publication at SWIFT

- Kick off the maintenance of 2nd version of CCC table

- Remove errors from paper table

- Discuss stages to include commonly used Chinese characters

- Coding structure when table is expanded beyond 10K

Discussion Topic 1:

Change of behaviour along with

CNAPS2

Discussion Topic 2:

SH FTZ vs HK offshore RMB

business

SR2014 and potential update on

Offshore CNY Guidelines

Common

challenges unique solutions