China's BOC and BoCom to Make Adjustments to Trading Instruments for Retail Clients During US Election

Bank of China (BOC), one of the four biggest state-owned commercial banks in China, announced on Monday some adjustments it may make to trading instruments for retail clients such as precious metal, forex and individual options during US Election, as global financial markets are expected to see extreme volatility due to the impact of the Election.

The lesson BOC has learned from the crude oil futures market crash in April made the bank become more cautious in its response to the upcoming United States Presidential election. Some measures the second oldest bank in China is likely to take on 3 November 2020 and 4 November 2020 include:

· adjusting the bid-ask spreads for key instruments to a level that may be significantly wider than usual under certain market conditions; 

· suspending bidding activity of some precious metal and forex products in the event of extreme circumstances when liquidity could be exhausted；

· reducing the single trading limit of some precious metal and forex products if liquidity declines dramatically.

In addition to BOC, Bank of Communications (BoCom), the fifth-largest bank in mainland China, released an announcement on the same day noting that the bank will take appropriate actions including widening spreads and/or restricting trading activities of certain forex, precious metals and crude oil products as required in response to market volatility during US Election.

Both banks highlighted in their statements that any changes they make during the Election would be canceled after global markets return to normal.