Foreign Exchange Administration: Elimination of Investment Limits for Qualified Overseas Investors

category:Finance
 Foreign Exchange Administration: Elimination of Investment Limits for Qualified Overseas Investors


At the same time, the State Administration of Foreign Exchange is submitting to the State Council for cancellation of the corresponding administrative licensing projects in accordance with the procedures. After approval, the relevant administrative licensing projects will be announced by the State Council.

Next, the State Administration of Foreign Exchange will continue to deepen the reform of foreign exchange management, continue to take effective measures to expand the opening up, support foreign investors to invest in domestic financial markets, and enhance the convenience of cross-border investment and financing. At the same time, we should adapt to the opening up, effectively guard against the risk of cross-border capital flows, and safeguard the national economic and financial security. (end)

Recently, with the approval of the State Council, the State Administration of Foreign Exchange (SAFE) decided to abolish the investment quota restrictions for QFII and RQFII (hereinafter referred to as QFII). Wang Chunying, spokesman and chief economist of the State Administration of Foreign Exchange, answered questions from reporters.

Question: What is the background of abolishing the investment quota restrictions of QFII and RQFII?

Answer: In 2002 and 2011, China implemented the Qualified Foreign Institutional Investor (QFII) system and the Renminbi Qualified Foreign Institutional Investor (RQFII) system respectively (hereinafter referred to as the Qualified Foreign Investor System). Qualified overseas investors system is one of the main channels for overseas investors to invest in domestic financial markets. It is an important institutional arrangement to enhance the convertibility of RMB capital account. It has played a positive role in the steady opening and deepening development of Chinas financial market.

In recent years, the State Administration of Foreign Exchange has earnestly implemented the deployment requirements of the Central Committee of the Party and the State Council on promoting a new pattern of comprehensive opening up, deepened the reform of the system of qualified foreign investors, improved prudent management, abolished the restrictions on the proportion of remittances, abolished the requirements for the lock-in period, and allowed qualified foreign investors to hold certificates on their behalf. Foreign exchange hedging of securities assets in China greatly facilitates foreign investors to invest in domestic financial markets. Subsequently, mainstream international indices such as MSCI, FTSE Russell, S&P Dow Jones and Bloomberg Barclays have incorporated Chinas stock and bonds into their index system, and steadily increased the weight of inclusion. Foreign investorsinvestment demand for Chinas financial market has increased accordingly.

The abolition of the investment quota restriction for qualified foreign investors is a major reform of the State Administration of Foreign Exchange in implementing the decision-making and deployment of the Central Committee of the Party and the State Council, deepening the reform and opening-up of financial markets and serving the new pattern of overall opening-up. It is also a major initiative launched by the State Administration of Foreign Exchange to further meet the investment needs of foreign investors in Chinas financial Reform initiatives.

Q: After the abolition of investment quota restrictions, what foreign exchange management procedures should QFII follow in investing in domestic securities markets?

Answer: Next, the State Administration of Foreign Exchange will immediately revise the Regulations on the Administration of Foreign Exchange for Domestic Securities Investment of Qualified Overseas Institutional Investors (State Administration of Foreign Exchange Announcement No. 1, 2018) and other relevant regulations to make it clear that the investment quota of a single qualified overseas investor will no longer be filed and approved. At that time, after obtaining the relevant qualifications approved by the securities regulatory authorities, foreign investors shall entrust domestic custodian banks with relevant registration as required, and open special fund accounts and follow-up fund exchange businesses in custodian banks on the basis of business registration certificates issued by the State Administration of Foreign Exchange. Question: Will the pilot country and region restrictions on qualified foreign institutional investors (RQFII) be lifted? A: Yes, when the investment quota limit for qualified foreign investors was abolished, the RQFII pilot countries and regions were also abolished. We welcome qualified overseas institutions from all over the world to use overseas RMB for domestic securities investment. The abolition of restrictions on RQFII pilot countries and regions will further facilitate foreign investors to invest in domestic securities markets and enhance the depth and breadth of Chinas financial market opening. Source: Responsible Editor of the State Administration of Foreign Exchange: Wang Xiaowu_NF

Answer: Next, the State Administration of Foreign Exchange will immediately revise the Regulations on the Administration of Foreign Exchange for Domestic Securities Investment of Qualified Overseas Institutional Investors (State Administration of Foreign Exchange Announcement No. 1, 2018) and other relevant regulations to make it clear that the investment quota of a single qualified overseas investor will no longer be filed and approved. At that time, after obtaining the relevant qualifications approved by the securities regulatory authorities, foreign investors shall entrust domestic custodian banks with relevant registration as required, and open special fund accounts and follow-up fund exchange businesses in custodian banks on the basis of business registration certificates issued by the State Administration of Foreign Exchange.

Question: Will the pilot country and region restrictions on qualified foreign institutional investors (RQFII) be lifted?

A: Yes, when the investment quota limit for qualified foreign investors was abolished, the RQFII pilot countries and regions were also abolished. We welcome qualified overseas institutions from all over the world to use overseas RMB for domestic securities investment. The abolition of restrictions on RQFII pilot countries and regions will further facilitate foreign investors to invest in domestic securities markets and enhance the depth and breadth of Chinas financial market opening.