Provisions on the Foreign Exchange Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors (2018)

Provisions on the Foreign Exchange Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors (2018)
Provisions on the Foreign Exchange Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors (2018)

Announcement of the State Administration of Foreign Exchange [2018] No. 1

June 10, 2018

The State Administration of Foreign Exchange has, in accordance with the Administrative Regulations of the People's Republic of China on Foreign Exchange and other applicable provisions, formulated the Provisions on the Foreign Exchange Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors which are hereby promulgated and shall take effect immediately from the issue date.

Provisions on the Foreign Exchange Administration of Domestic Securities Investment by Qualified Foreign Institutional Investors

Chapter I General Provisions


Article 1 For the purpose of regulating the foreign exchange administration of domestic securities investment of qualified foreign institutional investors (hereinafter referred to as "QFIIs"), these Provisions have been formulated in accordance with the Administrative Regulations of the People's Republic of China on Foreign Exchange (Order of the State Council No.532, hereinafter referred to as the "Administrative Regulations on Foreign Exchange"), the Administrative Measures for Domestic Securities Investments by Qualified Foreign Institutional Investors (Order of the China Securities Regulatory Commission, the People's Bank of China and the State Administration of Foreign Exchange No.36) and other applicable provisions.

Article 2 For the purpose of these Provisions, a QFII refers to a foreign institutional investor investing in the domestic securities market with the permission of the China Securities Regulatory Commission (hereinafter referred to as the "CSRC").

Article 3 QFIIs shall appoint domestic custodians (hereinafter referred to as "custodians") to represent them in going through the relevant formalities specified herein.

Article 4 The State Administration of Foreign Exchange and its branches and foreign exchange departments shall supervise, administer and examine the quotas of investment made by QFIIs in domestic securities (hereinafter referred to as the "investment quotas"), foreign exchange accounts, receipts, payments, and capital remittances, etc.

Chapter II Administration of Investment Quotas


Article 5 The State regulates domestic securities investment of QFIIs by quota. The State Administration of Foreign Exchange subjects the investment quota for each QFII to administration by record-filing and by examination and approval.
A QFII may, after its qualification is approved by the CSRC, acquire an investment quota (hereinafter referred to as the "base quota") up to a certain proportion of its asset size or the securities asset size it manages (hereinafter referred to as the "asset size"), by way of the record-filing; the portion of a proposed investment quota, in excess of the base quota, must be approved by the State Administration of Foreign Exchange.
Investment quotas of such institutions as foreign sovereign wealth funds, central banks and monetary authorities are not subject to the restrictions on the proportion of the asset size, and these institutions may be granted with the appropriate investment quotas, depending on their own demands for investment in the domestic securities market.

Article 6 The criteria of the base quota for a QFII shall be as follows:
1. Where any asset belonging to (or managed by) any QFII or corporation to which the QFII is subordinate is mainly located outside China, the calculation formula shall be: USD100 million average asset size for the recent three years* 0.2% - the acquired quota as an RMB qualified foreign institutional investor (converted into USD for calculation, hereinafter referred to as the "RQFII quota");
2. Where any asset belonging to (or managed by) any QFII or corporation to which the QFII is subordinate is mainly located in China, the calculation formula shall be: CNY5 billion (or its equivalent in a different currency) the asset size of the previous year * 80% - the acquired RQFII quota (converted into USD for calculation);
3.
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