Banking Institutions in Shanghai:

To further implement the Notice of the State Council on Issuing the Framework Plan for the China (Shanghai) Pilot Free Trade Zone (State Publication [2013] No. 38) and the Notice of the China Banking Regulatory Commission on Issues Concerning Banking Supervision in the China (Shanghai) Pilot Free Trade Zone (Banking Regulatory Publication [2013] No. 40), and to promote the innovation and stable development of banking industry in the China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as "the PFTZ"), as approved by CBRC, the institutional arrangements of banking supervision in the PFTZ are hereby issued to you as follows:

I. Overall Supervision Requirements

Shanghai banking institutions dealing with the PFTZ-related business shall comply with the prudent supervision requirements of CBRC, except those provided otherwise. More prudent management standards shall apply to the risk management area, including liquidity risk, market risk, counterparty credit risk, country risk, compliance risk and financial consumer protection.

To facilitate investment and trade, CBRC encourages and supports banking institutions in Shanghai to introduce innovative services, especially services that meet the financial demands of their clients in the PFTZ in conducting cross-border trade, investment and financing; and supports them to provide diversified risk management services by leveraging domestic and overseas markets.

II. Risk Evaluation Requirements

Shanghai Banking institutions dealing with the PFTZ-related business shall conduct pre-establishment and continuous risk self-evaluation for such business. Specific evaluation requirements are listed in Annex 1, Guidelines on the Risk Evaluation of Banking Services in the PFTZ (Interim). Self-evaluation shall focus on the effectiveness and adaptability of the risk management procedures and ability for the PFTZ-related business.

The pre-establishment self-evaluation report shall be submitted by the legal entity of banking institutions dealing with the PFTZ-related business or their entrusted supervisory institution to CBRC Shanghai Bureau in written form within 10 working days after the official launch of the business. For banking institutions whose legal entity was registered in Shanghai, the report shall be submitted by their headquarters. Banking institutions that have established business in the PFTZ before the issuance of this Notice shall submit their self-evaluation report before June 10, 2014. After the establishment, they shall submit the self-evaluation report of the last year to CBRC Shanghai Bureau before the end of March every year. In case major risks are discovered in evaluation, the relevant institutions shall take prompt measures to ensure that the institutional arrangements of risk management are constantly adapted to their business in the PFTZ and in the meantime, report the related risks to CBRC Shanghai Bureau.