China to combine QFII and RQFII 01 February 2019Beijing Reporter: Maddie Saghir
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China is set to consolidate the Qualified Foreign Institutional Investor (QFII) and RMB Qualified Foreign Institutional Investor (RQFII) schemes into one.
They are doing this in order to promote the steady and sound developments of capital markets.
When consolidated into one scheme, the QFII rules will act as the basis while incorporating RQFII rules and they will integrate the two special provisions of the QFII scheme, forming the unified Measures and Provisions.
This will mean that foreign investors will only need to make a one-time license application. For the institutions from countries and regions that have not yet obtained the RQFII quota, funds for investment can be raised in foreign countries.
The China Securities Regulatory Commission (CSRC) has drafted two consultation papers on the Measures and Provisions.
In the Measures consultation paper, it was noted that in order to facilitate RMB internationalisation, qualified investors are encouraged to invest with offshore RMB funds.
Under article 3, the paper also cited: “A qualified investor shall designate an eligible domestic commercial bank as the custodian for its assets, and designate a domestic securities or futures company, in accordance with law, to carry out its investments in China’s securities and futures
Markets.”
The QFII scheme and the RQFII scheme were respectively launched in 2002 and 2011, and have been operating in a steady manner, CSRC noted.
According to CSRC, the schemes have been playing a positive role in channelling long-term foreign capital into China, optimising investors’ structure of the capital market.
Additionally, they have been carrying out the value investing, enhancing corporate governance of listed companies, and promoting the sound and steady development of China’s capital market.
The CSRC are soliciting public comments on the Measures and Provisions and the public comment period lasts 30 days until 2 March 2019.
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