Introduction
On 4 February, the China Banking Regulatory Commission (the "CBRC") promulgated the Provisional Measures for the Administration of Derivatives Activities of Financial Institutions (the "Derivatives Measures"). The Derivatives Measures took effect from 1 March 2004. The Derivatives Measures are the first regulations specifically enabling financial institutions to engage in derivatives transactions in The People's Republic of China (the "PRC"). In promulgating the Derivatives Measures, the CBRC aims to provide financial institutions with a clear legal basis and regulatory certainty in respect of financial derivatives. This has been seen to be necessary in light of the continuing increase in demand for financial derivatives in the Chinese domestic market and has in part been possible because of the improved internal management and increased sophistication of Chinese domestic financial institutions in recent years.
