China SecuritiesDepositary and Clearing Corporation Limited, Registration and Settlement for Securities Investments in China by Qualified Foreign Institutional Investors Implementing Rules

Issued: December 1 2002
Effective: as of date of issue
Interpreting authority: China Securities Depositary and Clearing Corporation Limited

Main contents: After entrusting a domestic securities company, a qualified foreign institutional investor should entrust a custodian to open a securities account with the China Securities Depositary and Clearing Corporation Limited on its behalf (Article 4). The Rules list the documents required for applying to open such securities account by the custodian on behalf of the qualified foreign institutional investor (Article 5). Part Three deals with the operation of securities registration and settlement concerning distribution of cash dividends, inquiry, freezing and defrosting of assets by judicial departments and incorrect securities transactions. The custodian shall be responsible for handling the settlement business for the qualified investors and bear the corresponding settlement responsibilities (Article 15). Part Four concerns risk management. If a funds overdraft occurs, the custodian is required to pay a penalty interest, its securities may be detained, such overdraft may be recorded, its financial standing may be strictly monitored, its purchase may be restricted, etc.
Related legislation: Administration of Securities Investments in China by Qualified Foreign Institutional Investors Tentative Procedures, Nov 5 2002, CLP 2002 No.10 p46