Central banks looking to trade foreign exchange derivatives in China's interbank market can now use 'Isda agreements' as the legal basis for transactions, the People's Bank of China (PBoC) has confirmed.

It is the first time China has allowed derivatives trading under a legal framework other than its own.

The Isda master agreement, published by the International Swaps and Derivatives Association, is a standardised contract for over-the-counter derivatives transactions used by counterparties