China's central bank to integrate forex trading systems - report

The People's Bank of China (PBoC), the central bank, is planning to integrate in the second half of 2006 the country's traditional foreign exchange trading system with a system initiated last year, in a bid to improve trading efficiency and facilitate monitoring, the official China Securities Journal reported, citing a source familiar with the issue. In May last year allows domestic spot trading in eight pairs of foreign currencies, but is separate from yuan trading.
The eight pairs of foreign currencies are namely the euro against the US dollar, the Australian dollar against the US dollar, sterling against the US dollar, the US dollar against the Swiss franc, the US dollar against the Hong Kong dollar, the US dollar against the Canadian dollar, the US dollar against the Japanese yen and the euro against the yen.

The decade-old China Foreign Exchange Trade System on the interbank market currently trades just four currency pairs -- the yuan against the euro, the yen, the US dollar and Hong Kong dollar.

The combination of the two systems will allow swaps and futures trading, as well as spot trading in the yuan against other foreign currencies, the report said.
China is speeding up reforms in the capital markets after revaluing the yuan by 2.1 pct to the dollar and scrapping an 11-year-old peg or managed float linked to a basket of currencies last July.
It also launched an OTC system in the interbank foreign exchange market, allowing two participants to make currency trades based on credit without the intervention of a third party and introduced a market-making system in January.