Clifford Chance

CSRC New Rules to Buck Up the QFII Program

31 July 2012

Ever since the Qualified Foreign Institutional Investors (QFII(s)) initiative started in 2002, the China Securities Regulatory Commission (CSRC), the People's Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) have taken a step-by-step approach to promote the program by lowering barriers for QFIIs' entry and expanding the universe of permissible investments available to QFIIs. China remains keen to continue to deepen the opening of its domestic capital markets, and in that context CSRC and SAFE have looked to issue more QFII licenses and quota. At present, 172 institutions have obtained QFII licenses, of which 147 have been granted a total quota of US$28.533 billion.

 

In light of the still smaller market share of QFIIs, following a public consultation from 20 June 2012 to 5 July 2012,  CSRC issued the Provisions on the Issues Related to Implementing the Administrative Measures for Domestic Securities Investment by Qualified Foreign Institutional Investors (QFII Provisions) on 27 July 2012, which came into effect on the same day. The new QFII Provisions should permit the easier participation by a wider group of QFIIs. This article discusses the major changes as a result of the new QFII Provisions.

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