Shanghai on Wednesday received approval from the nation's top foreign-exchange regulator to allow individuals and non-financial firms to conduct two-way forex transactions on a trial basis.

At the same time, the State Administration of Foreign Exchange also granted the same right to Beijing.

Shanghai, on the cusp of being an international financial hub, will allow non-banking institutions to offer the service to individuals, with the Pudong New Area center stage.

The trial services in Pudong will be a preparatory step for Shanghai World Expo 2010, the administration said.

Qualified non-financial firms can provide two-way (yuan-to-forex, forex-to-yuan) services to domestic individuals with an annual maximum of US$50,000. The daily limit is set at US$5,000.

Expatriates can buy up to US$5,000 worth of yuan daily as well.

Overseas individuals can sell up to US$500 worth of yuan a day. The limit will rise to US$1,000 if they have passed the country's Customs checkpoints at airports and border controls.

Shanghai Zhangjiang ICE Foreign Exchange Ltd, a joint venture between Zhangjiang Group and International Currency Exchange (Europe) Plc, is the first non-financial company allowed to offer the service in the city.

The company has three outlets in Pudong, two at Pudong International Airport and one at the Zhangjiang High-Tech Park Metro station.

More outlets in Xintiandi and Yuyuan Garden area were planned, Liu Xiaoxi, general manager of the company, told Shanghai Daily.

"It's hard to say how many outlets we will open by the end of the year," she said. "We will choose location with the exchange demand.

"We are not competing with banks - we complement each other."

While most bank branches shut about 5:00 PM, the company runs its outlets 24 hours in the airport and until 7:00 AM at the Metro station.

The firm will charge 50 yuan (US$7.30) for each exchange. Identification documents are needed and investors must have a minimum registered capital of 1 million yuan.

They can choose banks to cooperate with and select the type of currency to transact. Such companies should have been run as bank agents on foreign-currency exchanges for more than a year and have at least two management executives familiar with the policy and service.

The long-awaited move, the regulator said, was "meeting the increasing demand on foreign-exchange services."

(Shanghai Daily August 21, 2008)