To Members of the ISDA Board and ISDA Policy Staff:

ISDA has received the attached reply from the Chinese SAFE regarding our
GITIC-related inquiries.  Our initial reaction to this letter is that it
contains at least some good news in that SAFE has stated that it is not
necessary to obtain transaction-specific for derivatives transactions with
Chinese counterparties that are conducted "for hedging purposes."

We will ask Allen & Overy Hong Kong to prepare a brief memo on the
implications of this letter for the GITIC case and for more general dealings
with Chinese counterparties.  This memo, together with our original letter
to SAFE and the attached SAFE reply, will be circulated to all ISDA members
as quickly as possible.

Rick

-----Original Message-----
From: Chin.Chong.Liew@AllenOvery.com
[mailto:Chin.Chong.Liew@AllenOvery.com]
Sent: Wednesday, November 29, 2000 4:00 PM
To: Brian.yiu@hk.standardchartered.com; Dennis.Wan@chase.com;
eric@tmihk.com; gillis@sifl.com.hk; nakada@sifl.com.hk;
kenneth.j.blomster@hk.arthurandersen.com;
Laura.schramm@hk.pwcglobal.com; lyftan@lehman.com;
Chin.Chong.Liew@AllenOvery.com; Magnus.spencer@csfb.com;
Michael.J.Suppan@bankofamerica.com; Kiyota@fcmc.com; Philip.tsao@gs.com;
quentin_hills@hk.ml.com; Richard.jackson@jfleming.com;
Stephane.cuny@socgen.com; Voons@ms.com; Tricia.bowden@gs.com;
Zhangkun@mailcity.com; rgrove@isda.org; rpickel@isda.org;
RAinslie@isda.org
Cc: azam.mistry@hsbc.com; apapesch@isda.org
Subject: Reply from SAFE




I attach for your information the reply which Azam received from SAFE today
(together with an English translation) in response to ISDA's letter of 10th
August, 2000 .

The good news is that SAFE agreed that PRC financial institutions
conducting derivative transactions for hedging purposes in the
international financial market should comply with the applicable PRC law
and that it would not be necessary for them to obtain a transaction
specific approval from SAFE.

Kind regards,
Chong

(See attached file: safe.PDF)(See attached file: safetranslation.PDF)



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 - safe.PDF
 - safetranslation.PDF