Circular of the People's Bank of China and the State Administration of Foreign Exchange on Issues concerning the Administration of Domestic Securities Investment by RMB Qualified Foreign Institutional Investors

Circular of the People's Bank of China and the State Administration of Foreign Exchange on Issues concerning the Administration of Domestic Securities Investment by RMB Qualified Foreign Institutional Investors
Circular of the People's Bank of China and the State Administration of Foreign Exchange on Issues concerning the Administration of Domestic Securities Investment by RMB Qualified Foreign Institutional Investors

Yin Fa [2018] No.157



June 12, 2018


With a view to regulating the administration of domestic securities investment by RMB qualified foreign institutional investors ("RMB qualified investors") in accordance with, among other relevant regulations, the Measures for the Pilot Program of Domestic Securities Investment by RMB Qualified Foreign Institutional Investors (Order of the China Securities Regulatory Commission, the People's Bank of China and State Administration of Foreign Exchange No.90), relevant issues are hereby given as follows:

I. The People's Bank of China, the State Administration of Foreign Exchange and all their branches shall exercise supervision, regulation and inspection by law of, among others, domestic securities investment quota ("investment quota"), capital accounts and capital payments of RMB qualified investors.

II. Where any RMB qualified investor invests in a domestic securities market upon the approval of the China Securities Regulatory Commission (hereinafter referred to as the "CSRC"), it shall retain its domestic custodian ("custodian") to deal with the relevant formalities required herein on its behalf.
Each RMB qualified investor shall retain no more than three custodians. Where any RMB qualified investor retains more than one custodian, it shall designate one specific custodian as the chief reporter (the custodian is the chief reporter where there is only one custodian) to be responsible for dealing with, among other issues, the record-filing of the investment quota, application for assessment and registration of the subject information.

III. The State Administration of Foreign Exchange shall conduct registration or manage examination and approval, of the investment quota for a single RMB qualified investor.
A RMB qualified investor may, upon its qualification being approved by the CSRC, acquire an investment quota no more than a certain proportion of its asset size or the securities asset size it manages ("asset size") ("base quota") in the form of record-filing. Any application for an investment quota higher than the base quota shall be approved by the State Administration of Foreign Exchange.
Foreign sovereign wealth funds, central banks and monetary authorities are not subject to the restriction on the proportion of the asset size in terms of investment quotas, and may be granted the appropriate investment quotas based on their own demand for investments in the domestic securities market, which shall be administrated in the form of record-filing.

IV. Standards on the base quota for RMB qualified investors are as follows:
1. where any asset belonging to (or managed by) any RMB qualified investor or corporation to which the RMB qualified investor is subordinate is mainly located outside China, the calculation formula shall be: USD100 million (or its equivalent in a different currency) average asset size for the recent three years * 0.2% - the acquired quota as qualified foreign institutional investors (converted into CNY for calculation, hereinafter referred to as the "QFII quota"); and
2. where any asset belonging to (or managed by) any RMB qualified investor or corporation to which the RMB qualified investor is subordinate is mainly located in China, the calculation formula shall be: CNY5 billion asset size of the previous year * 80% - the acquired QFII quota (converted into CNY for calculation).
The conversion mentioned above shall be calculated at the currency rate of various currencies against USD published by the State Administration of Foreign Exchange in the month prior to the date of application.
The People's Bank of China and the State Administration of Foreign Exchange may adjust the above standards by taking the international balance of payments, development and liberalization of capital markets and other factors into consideration.

V. Any RMB qualified investor shall submit the following materials to its chief reporter when applying for registration for an investment quota within the quantity of the base quota:
1.
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