Clifford Chance

China's QFII Regime – A Complete Review of the Regulatory Scheme and Compliance Risks

25 May 2012

Since its inception in late 2002 and UBS AG being granted the first Qualified Foreign Institutional Investor (QFII) licence in mid-2003, China's QFII regime has evolved rapidly attracting a wide range of international institutions from sizable securities houses and banks to fund managers, insurance companies, sovereign wealth funds, central banks, pension plans and universities. As of April 2012, China's securities regulator, the China Securities Regulatory Commission (CSRC), had approved 158 QFIIs from 23 countries of which 129 QFIIs  had been granted investment quotas by the State Administration of Foreign Exchange (SAFE, China's foreign exchange regulator) in the amount of US$24.55 billion.  As of 23 March 2012, the total market value of securities investments of all QFIIs had reached around RMB265.6 billion (US$42.2 billion), representing approximately 1.09% of the total market value of tradable A shares.  CSRC statistics show that the top five QFII origin countries/regions are the United States,  United Kingdom, Japan, Korea and Hong Kong

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