Optimizing Management of the Domestic Securities and Futures Investment Capital of Qualified Investors to Steadily Promote High-Standard Institutional Opening-Up of the Financial Market
To implement the guiding opinions of the third plenary session of the 20th CPC Central Committee, progressively expand the institutional opening-up of the financial sector, and optimize the qualified foreign investors scheme, the People's Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) recently issued a notice on amending the Regulations on the Domestic Securities and Futures Investment Capital of Foreign Institutional Investors. The amended Regulations will further improve the management of the cross-border capital of Qualified Foreign Institutional Investors (QFIIs) and RMB Qualified Foreign Institutional Investors (RQFIIs), and will come into effect on August 26, 2024.
The amended Regulations contains the following key changes:
1. Simplified business registration procedures. The Regulations states that registration for QFII/RQFII businesses is completed by the principal reporter (custodian) through SAFE's ASOne platform. It also clarifies the rules for change of registered information and deregistration.
2. Optimized account management. The dedicated RMB deposit accounts for securities trading or derivatives trading are merged to reduce the number of accounts that need to be opened for various types of investment, with cost-saving effects.
3. Improved foreign exchange rules. The rules for cross-border capital flows of QFIIs and RQFIIs have been optimized, in particular the rules on which currencies can be transferred into and out of China, to make it easier for foreign institutional investors to invest in domestic securities.
4. Unified FX risk management model for QFII/RQFII and CIBM. The Regulations permits QFIIs and RQFIIs to complete the spot purchase and sale of foreign currencies and FX derivatives transactions through a domestic financial institution qualified to provide such foreign-currency services or China’s interbank FX market, in addition to their custodians, on condition that such activities are based on bona fide transactions or hedging needs.
The Regulations helps establish a set of simple and harmonized rules for the onshore securities investment capital under China’s market opening-up programs, so as to facilitate QFII/RQFII investment in China's capital market and further promote high-quality opening-up of the capital account.
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