Circular of the People's Bank of China and the State Administration of Foreign Exchange on Issuing the Administrative Provisions for Funds Invested by Foreign Institutional Investors in China's Bond Market
Circular of the People's Bank of China and the State Administration of Foreign Exchange on Issuing the Administrative Provisions for Funds Invested by Foreign Institutional Investors in China's Bond Market
Circular of the People's Bank of China and the State Administration of Foreign Exchange on Issuing the Administrative Provisions for Funds Invested by Foreign Institutional Investors in China's Bond Market
Yin Fa [2022] No.258
November 10, 2022
To support and regulate the investment by foreign institutional investors in China's bond market, the People's Bank of China and the State Administration of Foreign Exchange have drafted the Administrative Provisions for Funds Invested by Foreign Institutional Investors in China's Bond Market in accordance with the Law of the People's Republic of China on the People's Bank of China, the Regulations of the People's Republic of China on Foreign Exchange Administration and other relevant regulations and hereby issue the same to you for your compliance.
Attachment: Administrative Provisions for Funds Invested by Foreign Institutional Investors in China's Bond Market
Article 1 The Provisions are enacted in accordance with the Law of the People's Republic of China on the People's Bank of China, the Regulations of the People's Republic of China on Foreign Exchange Administration and other relevant laws and regulations to support and regulate the investment by foreign institutional investors in China's bond market.
Article 2 “Foreign institutional investor” as mentioned in the Provisions refers to an eligible foreign institution under the Announcement of the People’s Bank of China, the China Securities Regulatory Commission and the State Administration of Foreign Exchange [2022] No.4 who directly invests in China’s bond market through multi-tiered custody, a settlement agent or other forms.
Article 3 “China’s bond market” as mentioned in the Provisions includes the domestic inter-bank bond market and the domestic exchange bond market in China.
Article 4 Foreign institutional investors may choose any currency to remit and invest in China's bond market. Foreign institutional investors are encouraged to invest in China's bond market using RMB for cross-border receipts and payments, and complete cross-border RMB settlement through the Cross-border Interbank Payment System (CIPS).
Article 5 The domestic custodian (hereinafter referred to as “custodian”) or settlement agent for a foreign institutional investor shall handle relevant matters on behalf of the foreign institutional investor in accordance with the applicable requirements of the Provisions.
Article 6 The People's Bank of China (PBOC), the State Administration of Foreign Exchange (SAFE) and their branches shall supervise, regulate and inspect by law, the accounts, receipts and payments, and remittances, among others, involved in the investment by foreign institutional investors in China's bond market.
Article 7 The SAFE implements registration-based management of the funds invested by foreign institutional investors in China's bond market.
Foreign institutional investors shall, within 10 business days of receipt of the Notice of Records Filed for Investment in China’s Bond Market or other equivalent document issued by the relevant financial regulatory authority, designate a custodian or settlement agent to register on its behalf on the basis of such document through the SAFE’s Capital Account Information System (hereinafter referred to as the “Capital Account Information System”).
Article 8 The custodian or settlement agent shall open a special (RMB or/and foreign exchange) cash account for investment in China’s bond market (hereinafter referred to as the “special bond market cash account”) for the foreign institutional investor on the basis of the business registration certificate generated on the Capital Account Information System.
The scope of receipts of a special bond market cash account includes: inbound remittance of principal and related taxes and fees (taxes, custodian fees, audit fees, management fees, etc.) by the foreign institutional investor from abroad, proceeds from the sale of bonds, principal and interest recovered upon maturity of bonds, incoming transfer of funds in relation to qualified trades of bond or foreign exchange derivatives, incoming transfer of funds in relation to domestic foreign exchange settlement and sales, incoming transfer of funds between special bond market capital accounts opened under the same name, incoming transfer of funds from the special domestic account of a Qualified Foreign Institutional Investor (QFII) /Renminbi Qualified Foreign Institutional Investor (RQFII) with the same name, and other qualified receipts as specified by the PBOC and the SAFE.
The scope of payments of a special bond market account includes: payment of bond trading prices and related taxes and fees, outbound remittance of investment principal and income, outgoing transfer of funds in relation to qualified trades of bond or foreign exchange derivatives, outgoing transfer of funds in relation to domestic foreign exchange settlement and sales, outgoing transfer of funds between special bond market capital accounts opened under the same name, outgoing transfer of funds to the special domestic account of a Qualified Foreign Institutional Investor (QFII) /Renminbi Qualified Foreign Institutional Investor (RQFII) with the same name, and other qualified payments as specified by the PBOC and the SAFE.
Funds in a special bond market account shall not be used for purposes other than investing in China’s bond market.
Article 9 Where important information such as the name, custodian or settlement agent of a foreign institutional investor changes, the relevant custodian or settlement agent shall complete an alteration registration on behalf of the foreign institutional investor through the Capital Account Information System.
Where a foreign institutional investor exits China’s bond market and closes the relevant cash account, a deregistration shall be completed on behalf of the foreign institutional investor by the custodian or settlement agent within 30 business days of closing of the cash account.
Article 10 The same foreign institutional investor’s QFII/RQFII’s special domestic account and its special bond market account can directly transfer funds between them domestically for use in domestic securities investment, and the subsequent trading, use of funds, clearing and other activities after such transfer shall be governed by the applicable post-transfer channel management requirements.
Article 11 A foreign institutional investor investing in China's bond market shall, as a matter of principle, keep its inbound remittance and outbound remittance of funds invested in China’s bond market consistent in terms of currency, and cross-currency arbitrage between RMB and a foreign currency is not allowed.
......
Yin Fa [2022] No.258
November 10, 2022
To support and regulate the investment by foreign institutional investors in China's bond market, the People's Bank of China and the State Administration of Foreign Exchange have drafted the Administrative Provisions for Funds Invested by Foreign Institutional Investors in China's Bond Market in accordance with the Law of the People's Republic of China on the People's Bank of China, the Regulations of the People's Republic of China on Foreign Exchange Administration and other relevant regulations and hereby issue the same to you for your compliance.
Attachment: Administrative Provisions for Funds Invested by Foreign Institutional Investors in China's Bond Market
Article 1 The Provisions are enacted in accordance with the Law of the People's Republic of China on the People's Bank of China, the Regulations of the People's Republic of China on Foreign Exchange Administration and other relevant laws and regulations to support and regulate the investment by foreign institutional investors in China's bond market.
Article 2 “Foreign institutional investor” as mentioned in the Provisions refers to an eligible foreign institution under the Announcement of the People’s Bank of China, the China Securities Regulatory Commission and the State Administration of Foreign Exchange [2022] No.4 who directly invests in China’s bond market through multi-tiered custody, a settlement agent or other forms.
Article 3 “China’s bond market” as mentioned in the Provisions includes the domestic inter-bank bond market and the domestic exchange bond market in China.
Article 4 Foreign institutional investors may choose any currency to remit and invest in China's bond market. Foreign institutional investors are encouraged to invest in China's bond market using RMB for cross-border receipts and payments, and complete cross-border RMB settlement through the Cross-border Interbank Payment System (CIPS).
Article 5 The domestic custodian (hereinafter referred to as “custodian”) or settlement agent for a foreign institutional investor shall handle relevant matters on behalf of the foreign institutional investor in accordance with the applicable requirements of the Provisions.
Article 6 The People's Bank of China (PBOC), the State Administration of Foreign Exchange (SAFE) and their branches shall supervise, regulate and inspect by law, the accounts, receipts and payments, and remittances, among others, involved in the investment by foreign institutional investors in China's bond market.
Article 7 The SAFE implements registration-based management of the funds invested by foreign institutional investors in China's bond market.
Foreign institutional investors shall, within 10 business days of receipt of the Notice of Records Filed for Investment in China’s Bond Market or other equivalent document issued by the relevant financial regulatory authority, designate a custodian or settlement agent to register on its behalf on the basis of such document through the SAFE’s Capital Account Information System (hereinafter referred to as the “Capital Account Information System”).
Article 8 The custodian or settlement agent shall open a special (RMB or/and foreign exchange) cash account for investment in China’s bond market (hereinafter referred to as the “special bond market cash account”) for the foreign institutional investor on the basis of the business registration certificate generated on the Capital Account Information System.
The scope of receipts of a special bond market cash account includes: inbound remittance of principal and related taxes and fees (taxes, custodian fees, audit fees, management fees, etc.) by the foreign institutional investor from abroad, proceeds from the sale of bonds, principal and interest recovered upon maturity of bonds, incoming transfer of funds in relation to qualified trades of bond or foreign exchange derivatives, incoming transfer of funds in relation to domestic foreign exchange settlement and sales, incoming transfer of funds between special bond market capital accounts opened under the same name, incoming transfer of funds from the special domestic account of a Qualified Foreign Institutional Investor (QFII) /Renminbi Qualified Foreign Institutional Investor (RQFII) with the same name, and other qualified receipts as specified by the PBOC and the SAFE.
The scope of payments of a special bond market account includes: payment of bond trading prices and related taxes and fees, outbound remittance of investment principal and income, outgoing transfer of funds in relation to qualified trades of bond or foreign exchange derivatives, outgoing transfer of funds in relation to domestic foreign exchange settlement and sales, outgoing transfer of funds between special bond market capital accounts opened under the same name, outgoing transfer of funds to the special domestic account of a Qualified Foreign Institutional Investor (QFII) /Renminbi Qualified Foreign Institutional Investor (RQFII) with the same name, and other qualified payments as specified by the PBOC and the SAFE.
Funds in a special bond market account shall not be used for purposes other than investing in China’s bond market.
Article 9 Where important information such as the name, custodian or settlement agent of a foreign institutional investor changes, the relevant custodian or settlement agent shall complete an alteration registration on behalf of the foreign institutional investor through the Capital Account Information System.
Where a foreign institutional investor exits China’s bond market and closes the relevant cash account, a deregistration shall be completed on behalf of the foreign institutional investor by the custodian or settlement agent within 30 business days of closing of the cash account.
Article 10 The same foreign institutional investor’s QFII/RQFII’s special domestic account and its special bond market account can directly transfer funds between them domestically for use in domestic securities investment, and the subsequent trading, use of funds, clearing and other activities after such transfer shall be governed by the applicable post-transfer channel management requirements.
Article 11 A foreign institutional investor investing in China's bond market shall, as a matter of principle, keep its inbound remittance and outbound remittance of funds invested in China’s bond market consistent in terms of currency, and cross-currency arbitrage between RMB and a foreign currency is not allowed.
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