China’s ICBC to restrict some currency and commodity trading

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SHANGHAI (Reuters) – The Industrial and Commercial Bank of China (ICBC) said on Friday it would restrict certain types of retail businesses involving foreign exchange and commodity trading.

FILE PHOTO: The logo of the Industrial and Commercial Bank of China (ICBC) is pictured at the entrance to its branch in Beijing, China April 1, 2019. REUTERS/Florence Lo/File Photo

The move by China’s largest bank comes with a series of actions by regulators aimed at reducing financial risks, including mitigating rising commodity prices, banning cryptocurrency transactions and restriction of real estate speculation.

The bank’s restrictions also come as global energy prices have risen in response to power shortages in China and other parts of the world.

ICBC said in a statement that starting Oct. 17, it will suspend new account sign-ups for so-called “forex trading accounts.” As part of this activity, individuals may exchange foreign currency for yuan for speculative or hedging purposes, and may not withdraw or transfer foreign currency from trading accounts.

From November 14, existing clients will no longer be able to open new trading positions.

ICBC will also stop accepting new clients from Oct. 17 in similar trading activity involving energy, base metals, agricultural commodities and precious metal indices, according to the ICBC statement.

“Risk is high these days in the global forex and commodity markets, so please be careful to control risk,” the bank said.

In recent months, ICBC and other banks, including Bank of China and China Merchants Bank, have shut down currency trading firms that allowed individual customers to bet on currency pairs other than the yuan.

Chinese regulators have tightened control over the country’s foreign exchange market, Reuters reported last month.

Chinese banks have been burned by risky investment products in the past. Last year, Bank of China customers suffered losses on a crude oil-related product after oil prices fell.

Reporting by Shanghai Newsroom; Editing by David Goodman and Jane Merriman

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