Shanghai Clearing House recently announced that it has approved the Shanghai branch of Bank of America to be the clearing member of the first U. S. unincorporated institution in China, allowing it to operate Renminbi (RMB) interest rate swap.

The approval aims to fully implement the relevant provisions of the people's Bank of China on the centralized clearing of RMB interest rate swaps in the interbank market, carrying out the G20 regulatory plan to bring standardized over-the-counter derivatives into liquidation.

The Shanghai branch of Bank of America is significant in financial cross-border supervision. After the financial crisis in 2008, G20 countries, including China, reached an important consensus that all standardized over-the-counter financial derivatives should be brought into the category of centralized liquidation.

Although a consensus was reached, the bank has had difficulty in cross-border supervision and coordination. For example, the "long-arm jurisdiction" of the United States not only regulates its domestic over-the-counter financial derivatives market, but also regulates overseas counterparties of the domestic institutions. The trading platforms and clearing houses that provide trading and clearing services to the domestic institutions are required for extraterritorial jurisdiction.

Now, China and the United States have reached a consensus on how to solve this problem. In particular, national regulators carry out continuous and effective supervision and management of their clearing houses, in accordance with internationally recognized standards. On this basis, cross-border certification of clearing houses is replaced by mutual recognition among national regulatory bodies.

Therefore, the Shanghai Clearing House, as a qualified counterparty confirmed by China, was recognized by the United States, which contributed to the smooth operation of the Shanghai branch of Bank of America.