China's State Administration of Foreign Exchange (SAFE) Thursday issued new guidelines on foreign exchange market makers and classified them into three types in a move aimed at increasing liquidity on China's foreign exchange market and boosting its development.

Market makers are divided into spot trading market makers, forwards and swap trading market makers and comprehensive market makers, according to the new guidelines that would take effect on Jan. 1, 2011.

The foreign exchange regulator said 26 banks have been approved as spot market makers, including China Merchants Bank and China Minsheng Banking Corp., according to a statement posted on the website.

Also, 18 lenders were approved by the regulator to become forwards and swap trading market makers, including Bank of China, Agricultural Bank of China and Industrial and Commercial Bank of China.

A market maker in the inter-bank foreign exchange market is a member in this market who undertakes the obligation of selling and buying prices of currencies to other members on a continuing basis. China introduced the market maker system in January 2006.