Definition of Instrument

Forward rate agreement refers to a financial contract in which both trading parties agree to  exchange the interests which are respectively calculated at a fixed rate and a reference rate for a certain amount of nominal principal on a agreed date. Among the two parties, in the forward rate agreement, the buyer pays the interest at a fixed rate while the seller pays the interest at a reference rate.

Trading Mechanism

Bilateral trading and one-click trading

Forward rate agreement transaction can be conducted through the trading system of CFETS, by telephone, by fax and in other manners. For the concluded transaction not going through the trading system of CFETS, relevant financial institutions should deliver transaction records of forward rate agreement to CFETS for recognition before 12:00 a.m. of the next business day after such a transaction was concluded.

Reference Rate

Reference rate for forward rate agreement should be a benchmark market rate for the national interbank bond market released by CFETS and other organizations under the authorization of the PBC, or a benchmark rate announced by the PBC. Specific rate is agreed upon by both trading parties.

Market Participants

Of the national interbank bond market participants (referred to as market participants), financial institutions having a market maker or clearing agency business qualification, can conduct forward rate agreement transaction with all other market participants, and other financial institutions can conduct forward rate agreement transaction with all financial institutions, but non-financial institutions can only carry out hedge-purposed forward rate agreement transaction with the financial institutions having a market maker or clearing agency business qualification. 

Trading Hours

Beijing time: 9:00-12:00 am, 1:30-4:30 pm, excluding Chinese statutory holidays.