Joint Service of Trading Precious Metal via Account
Introduction This is a service of ICBC partner banks for their customers to buy/sell ICBC precious metal products via account using ICBC price quotes and background trading system. To enable the service, ICBC system is connected to the partner banks through Bank-Bank platform.
The service allows ICBC partner banks to expand business scope and enrich product lines, offering more services to meet the pent-up demand of customers to invest in precious metals. Partner banks have more room to grow and make profit.
Target Clients Banks and their subsidiaries established under corporate laws in China (excluding Hong Kong, Macau and Taiwan) and approved under China Banking Regulatory Commission to offer the service.
Advantages (I) Rich product lines: ICBC is the bank currently in the market that offers the most complete range of precious metals and currencies for customers to buy/sellgold, silver and platinum via RMB and USD accounts. (II) Good price: Being an active participant in precious metal market, ICBC offersthe most competitive prices. (III) Professional team: ICBC has a professional team experienced in trading precious metal and forex. They have deep knowledge about international precious metal and forex market to provide the best services to customers. (IV) Fast, stable trading system: ICBC offers fast, highly efficient transaction processing for partner banks backed by strong system and experienced staff.
Cases A customer of a ICBC partner bank pays RMB 31,500 to buy 100 grams of gold using RMB account at a price of RMB 315/gram through partner bank's Internet Banking. Though the Bank-Bank platform, partner bank issues a "buy" instruction to ICBC. ICBC deducts RMB 31,500 from the partner bank's interbank account, and returns the balance data to partner bank.
Two weeks later, if the gold price goes up to RMB 330 per gram, the customer then sells the 100 gram of gold in the account and gets back RMB 33,000. Partner bank sends a "sell" instruction to ICBC. ICBC deposits RMB 33,000 to the partner bank's interbank account, and returns the balance data to partner bank. The customer earns RMB 33,000-31,500 = RMB 1500. If the gold price drops to RMB 300 per gram, the customer suffers a book loss of RMB 1,500. Assume the customer sells the 100 grams in the account for immediate cash through partner bank's Internet Banking, then the customer receives RMB 30,000. Partner bank sends a "sell" instruction to ICBC. ICBC deposits RMB 30,000 to the partner bank's interbank account, and returns the balance data to partner bank. The customer loses RMB 31,500-30,000 = RMB 1,500. Partner bank collects a certain percentage of revenue based on the trading volume of precious metal at ICBC Bank-Bank platform.
Application Conditions Once an intention is reached with ICBC to offer the service, partner bank must provide photocopies of business license, financial institution permit, and application report submitted to China Banking Regulatory Commission. ICBC will check out the documentation provided.
Steps (I) Sign agreement: Before the opening of the service at Bank-Bank platform, partner bank must sign with ICBC the ICBC Cooperation Agreement on Precious Metal (Account) Service. (II) Develop interface: Partner bank sets up a project group to understand the related services and system, works with ICBC on the service channel for customers to trade precious metals using the interface provided by ICBC.
Operation Guidelines (I)Price quotes: ICBC system is connected to partner bank's system via Bank-Bank platform. During trading hours, partner bank looks up ICBC precious metal prices through the platform and quotes the price to customers. (II) Transaction processing 1. Open account: ICBC receives instruction from partner bank via Bank-Bank platform. ICBC system uses the information provided by partner bank to automatically open a personal account for customer of partner bank to buy/sell precious metal via account. The account will be bound to the settlement account of customer in partner bank. ICBC returns the account opening details to partner bank. 2. Buy/sell: Bank-Bank platform receives buy/sell instruction from the customer of partner bank, and automatically deducts/adds the amount in the interbank deposit clearing account opened by partner bank in ICBC. ICBC buys/sells the precious metal at ICBC quoted prices. ICBC system records the trading details into the personal account opened for customer of partner bank in ICBC. After the buying/selling, ICBC returns the result to partner bank in real-time. 3. Enquiry: Partner bank submits customer enquiry to ICBC. ICBC Bank-Bank platform receives the instruction from partner bank and returns the enquiry result to partner bank in real-time. 4. Cancel account: ICBC receives instruction from customer of partner bank via Bank-Bank platform to close account. ICBC system checks if the personal account of the customer for trading precious metals via account can be closed (cannot close if account has balance). If the condition is met, ICBC unbinds the account from thecustomer's settlement account in partner bank and closes the account. Result is returned to partner bank after the account is closed. If the account cannot be closed, ICBC system will not close the account. Reason will be returned to partner bank.
Risk Disclosure This service may involve risks (policy risk, price risk, communication system security, network system security). Partner bank should provide full information for customers to trade precious metals via account including service features, product structure and risks. Partner bank should let customers fully understand the potential risks and loss and make sure they are willing to bear the risks and loss.