Upon the approval by the State Council, for the purpose of further opening up China’s capital markets, China Securities Regulatory Commission (CSRC), People’s Bank of China (PBC), and State Administration of Foreign Exchange (SAFE) hereby release the Measures for the Administration of Domestic Securities and Futures Investment by Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors (hereinafter referred to as the Measures) on September, 25th , 2020. The CSRC is simultaneously releasing an implementary rule, Provisions on Issues Concerning the Implementation of the Measures for the Administration of Domestic Securities and Futures Investment by Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors (hereinafter referred to as the Provisions). The Measures and the Provisions shall take effect on November, 1st ,2020.
In accordance with the rule-making procedure, the CSRC has solicited public comments on the draft versions of the Measures and the Provisions. Market participants expressed universal support for the main contents of the Measures and Provisions and recommended expeditious implementation to promote market internationalization and balance the development of existent channels for foreign investment. Some domestic and foreign institutions recommended modifications to further ease foreign access, relax qualification requirements, facilitate investment, expand scope of investment, etc.. After thorough deliberation, comments that were reasonable and practical were incorporated into the finalized versions of Measures and Provisions.
Major revisions to previous QFII and RQFII rules are as follows:
Relaxing qualification requirements and facilitating investment and operations of QFIIs and RQFIIs. The previously separate regimes for QFII and RQFII qualifications and rules are integrated; qualification requirements are relaxed; application documents are streamlined; review cycle is cut short; and a simplified reviewing procedure is applied. The restriction on the number of intermediaries servicing a QFII or RQFII is removed; supervision over the reporting and filing of QFIIs and RQFIIs is improved; and requirements for data submission are reduced.
Gradually expanding investment scope. QFIIs and RQFIIs may invest in additional asset types in the Chinese domestic markets, including securities admitted on the National Equities Exchange and Quotations (NEEQ) market, private investment funds, financial futures, commodity futures, options, etc., and may participate in bond repurchase transactions, margin trading and securities financing on stock exchanges, and securities lending to securities finance company. Financial products including financial derivatives contracts as well as related trading models will be gradually relaxed for QFIIs and RQFIIs access in an orderly manner, which is to be announced by the CSRC upon agreement with the PBC and the SAFE.
Enhancing ongoing supervision. Cross-market surveillance, cross-border supervision and see-through regulation are enhanced. Regulatory enforcement against violations of laws and regulations are strengthened with specified application.
Going forward, the CSRC will stay committed to market liberalization and accelerate the two-way opening-up of Chinese domestic capital markets at a higher level.