In order to regulate foreign exchange receipts and payments associated with cross-border trade of environmental equities such as CO2 emissions reductions, the State Administration of Foreign Exchange recently promulgated the Circular of the General Affairs Department of the State Administration of Foreign Exchange on the Handling of Foreign Exchange Business Associated with the Trade of Environmental Equities Such as Carbon Dioxide Emissions Reductions (Hui Zong Fa [2010] No. 151), hereinafter referred to as the Circular). The Circular will come into force as of the date of promulgation.

The Circular mainly covers three areas: (1) When handling the procedures for receipts from cross-border trade of environmental equities, such as carbon dioxide emissions reductions, banks may handle the settlement of foreign exchange for domestic institutions or open a capital account foreign exchange account for the trade of environmental equities to preserve the relevant categories of foreign exchange earnings after examining the materials proving the authenticity of the relevant business according to the regulations and based on the needs of domestic institutions; (2) Domestic institutions such as environmental exchanges, emissions rights exchanges, and forest ownership exchanges may, upon approval of the State Administration of Foreign Exchange, open a foreign exchange account for the collateral of special tradefor deposits of collateral, to-be-paid commissions, and taxes by intended transferees, foreign exchange margins that should be refunded to intended transferees in cases of failure of payment, and collateral transferred to sellers and commissions and taxes deducted by the exchanges after conclusion of the relevant transactions; (3) The relevant requirements for the examination of materials, submission of information, registration of basic information, declaration of BOP statistics, and so forth are specified.