As the year draws to a close and a new one begins, significant developments have been observed in both policy and market aspects concerning the Shanghai Free Trade Account (FT Account) system.
In terms of institutional access, the expansion of the segregated accounting unit within the Shanghai Pilot Free Trade Zone has attracted industry attention. On January 8, JPMorgan Chase Bank (China) Company Limited Shanghai Branch was approved for the segregated accounting unit (FT) qualification, becoming the first newly added financial institution with this status in Shanghai in over five years. Some analysts pointed out that this also marks the first time in recent years that a bank has obtained the Shanghai FT qualification, potentially opening another window of opportunity for foreign capital to participate in China's cross-border financial business.
Shortly thereafter, on January 20, the People's Bank of China Shanghai Head Office updated the list of financial institutions with segregated accounting units once again. Zhejiang Chouzhou Commercial Bank Co., Ltd. was approved for the FT qualification, further confirming that the Shanghai FT system, which had not been updated for several years, has added new bank members. As of the latest update, there are a total of 62 financial institutions with segregated accounting units in the Shanghai region, 49 of which are banks. This update also involved permission upgrades for six banks: Hua Xia Bank Shanghai Branch → Hua Xia Bank Ping An Bank Shanghai Pilot Free Trade Zone Branch → Ping An Bank Co., Ltd. Hengfeng Bank Co., Ltd. Shanghai Branch → Hengfeng Bank Co., Ltd. China Guangfa Bank Co., Ltd. Shanghai Branch → China Guangfa Bank Co., Ltd. China Development Bank Shanghai Branch → China Development Bank China Zheshang Bank Co., Ltd. Shanghai Branch → China Zheshang Bank Co., Ltd.
It is understood that an FT account refers to a domestic and foreign currency account, identified with the prefix "FT", opened for a client within the segregated accounting unit of the Free Trade Zone. Different from ordinary bank accounts, it supports the free flow of cross-border funds and features characteristics such as the integration of domestic and foreign currencies and the application of offshore exchange rates. It primarily serves the trade and investment activities of enterprises within the Free Trade Zone and overseas institutions. Its key advantages include: managing multiple currencies through a single account, convenient fund transfers with overseas accounts, NRA, and OSA accounts, flexible foreign exchange conversion at lower costs, and the ability to open multiple accounts to meet different business needs. For enterprises operating in the Free Trade Zone or those with cross-border fund flow requirements, the FT account acts like a "golden key," serving as a crucial tool for optimizing cross-border fund management and reducing financial costs.
Notably, significant policy upgrades have also been implemented. On December 5, the "Measures for the Implementation of the Functional Upgrade of Free Trade Accounts in the Shanghai Pilot Free Trade Zone (Trial)" issued by the People's Bank of China Shanghai Head Office officially came into effect.
Among its provisions, Article 7 specifies that designated banks can directly process fund transfers between upgraded accounts and overseas accounts, offshore accounts, domestic accounts of overseas institutions, other upgraded accounts, multi-functional free trade accounts, and free trade accounts opened by non-residents, based solely on the payment instructions of pilot enterprises, i.e., "cross-first-line" transfers. Pilot enterprises conducting capital account transactions, excluding securities investments, are exempt from quotas and approval restrictions related to foreign debt beyond the investment-registered capital difference, full-scale cross-border financing, and overseas lending. They are also not required to undergo pre-transaction registration, filing, or open special accounts with the foreign exchange authorities.
Article 8 stipulates rules for "cross-second-line" fund transfers: Foreign currency transfers are not permitted between an upgraded account and a non-Free Trade Account under the same name. Transfers of RMB funds must be incorporated into macro-prudential quota management, with the calculation method and adjustment mechanism for these quotas clearly defined.
Following the implementation of these Measures, banking institutions responded proactively and swiftly.
Major state-owned banks such as Industrial and Commercial Bank of China and China Construction Bank, alongside foreign banks including Citibank and HSBC, took immediate action on the first day of the policy's implementation, actively processing functional upgrades for their clients' Free Trade Accounts and handling related cross-border financial business.
HSBC Bank (China) Company Limited, as one of the first batch of pilot foreign banks, successfully opened a functionally upgraded Free Trade Account for a participating multinational enterprise in the Shanghai Pilot Free Trade Zone, becoming one of the first foreign banks to complete such a transaction. Zeng Su, Managing Director of Global Payment Solutions at HSBC China, stated that this policy not only adds functionality to the accounts but is also expected to generate a "multiplier effect" for the liberalization and facilitation of cross-border trade and investment. It will help improve the efficiency of capital project fund allocation for enterprises and promote efficient settlement and financing between domestic and overseas funds centered around the real economy.
Citibank (China) Co., Ltd., also acting as a pilot bank in the first batch, successfully opened functionally upgraded Free Trade Accounts for four corporate clients, demonstrating its continued commitment to deepening financial innovation in the Shanghai Pilot Free Trade Zone and its dedication to providing enterprises with more flexible and efficient cross-border financial solutions.
Overall, the implementation of these new regulations brings multifaceted financial conveniences to eligible enterprises, making cross-first-line receipts and payments smoother, cross-second-line transfers more standardized, and financing and fund usage more flexible. This represents a significant move by the Shanghai Pilot Free Trade Zone to deepen financial reform and opening-up.
It is noteworthy that, from a professional perspective, the list of financial institutions with segregated accounting units, including those in the Shanghai Pilot Free Trade Zone, is expected to expand further in the future.
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