China will introduce an agreement on September 16 regulating the trade of domestic derivatives products by banks, the Wall Street Journal reported. The agreement will restrict banks to trading with organizations with which they have signed a master agreement covering trading in interest-rate swaps, bond forwards, foreign-exchange swaps, and forwards and cross-currency swaps. However, domestic banks are pushing for increased restrictions on foreign banks by demanding they provide credit guarantees. Foreign banks, which are currently allowed to trade without such guarantees, have expressed frustration at the demand; many had incorporated their local units to qualify for the same treatment as domestic banks.
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