As China maintained a long-established position that they were accelerating efforts to open financial markets and encourage foreign flows even further. A new regulation relating to foreign investors was established  on September 25, 2020.

“Measures for the Administration of Domestic Securities and Futures Investment  by Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors” was jointly issued with the approval of the State Council, the China Securities Regulatory Commission, the People’s Bank of China, and the State Administration of Foreign Exchange, which is scheduled to come into effect  on 1 November 2020.

What aspects have been revised  in the new regulations?

There are mainly three aspects were changed:

1.Lower barriers to entry and facilitate investment operations

• Unified QFII and RQFII qualifications and system rules into one.

• Access requirements and application documents has been simplified.

• The time  limit for approval and administrative licensing procedures has been shortened.

   

2.Steadily and orderly expand the scope of investment

• The specific transaction types and transaction methods of financial derivatives that QFII and RQFII can participate  in will be gradually opened based  on the approval of administration

•  In the new measure, QFII’s and RQFII’s are allowed  to invest in listed securities, private equity investment funds, financial futures, commodity futures, options, etc.  in the National SME Share Transfer System, and allow participation  in bond repurchases and stock exchange financing Securities lending and refinancing securities lending transactions,

   

3.Ensure continuous supervision

• Strengthen cross-market supervision, cross-border supervision and penetrating supervision.

• Strengthen penalties for violations, and refine regulatory measures applicable to specific violations.

   

Domestic practitioners believe that  the new measures to attract the participation of more foreign investors  in China’s securities futures market, and it will help the international influence of China’s capital markets as well as  further enhance the internationalization of China's currency.

They expect the implementation to attract more overseas capital into the domestic market, and providing the Chinese capital market with additional stable funds for long-term growth.

China central bank’s data shows that collectively totalled over 2.5 trillion yuan of investment through the QFII and RQFII and Shanghai, Shenzhen and Hong Kong Stock schemes, which equals around 4% of market  value  in China’s total A-share market at the end of Q2 of 2020. And nearly 20% more capital were held by QFII compare to the end of  2019.

 Wish to know more about the latest regulation of China capital market. Learn more:http://www.hffss.com/