The Missing Piece of the Puzzle: New QFII Rules Open A Share Market

Second, the QFII Tentative Procedures mark a vital step towards creating a climate for improved corporate governance and compliance in domestically listed companies, and can help reduce market volatility.

One of the reasons for the weakness in the compliance and corporate governance systems and records of many domestically listed PRC companies has been the traditional predominance of the State as the majority shareholder and the lack of a counterweight in the form of a strong institutional shareholder base. Hence, the State has been, in its dual roles as investor and regulator, effectively acting as both player and referee. While the QFII scheme is not going to resolve the structural issues overnight, nor is it going to suddenly improve the compliance and corporate governance standards of A share companies, it should exert a positive influence over time. The presence of international institutions with their investment culture and values should support the development of an institutional investment culture in China, and international investors' longer-term investment horizons (as compared to the typical local individual investor) should also help to reduce volatility in the PRC market.

A third reason for optimism is that the new regulations can help to entrench international best practice. Many commentators have remarked that given the very high P/E ratios on which most A shares trade, QFIIs are not going to want to dive into the market without first doing their homework. This is particularly true as there are likely to be comparably cheaper companies elsewhere. QFIIs are, therefore, likely to want to do site visits and carry out extensive due diligence on companies before investing. Their targets will increasingly become exposed to this kind of exercise and other international practices and will have to change their business methods if they want to attract international institutional investment. Domestic PRC companies will also have to overcome some of their traditional reluctance to disclose corporate information to outsiders. To a PRC company, the obvious benefit of the QFII scheme is the "halo" effect of having one of the world's leading financial institutions as a shareholder.

The fourth aspect of these regulations that is significant is how they show the continuing signs of reform and opening up under the new Chinese leadership.

The timing of the release of the QFII Tentative Procedures on the eve of the opening of the 16th Chinese Communist Party Congress in Beijing, which saw the handover of power to the "fourth generation" of CCP leaders, is probably not fortuitous. It was perhaps intended to convey the message that the policies of reform and opening up to foreign investment are set to continue, notwithstanding the far-reaching changes in the Chinese leadership that will take place in the coming months. It is notable that the introduction of the QFII scheme is a policy decision that takes China further down the road of securities market liberalization, but that the changes brought about by the QFII Tentative Procedures are not driven by specific WTO commitments or market access deadlines. This should be seen as a positive signal of China's commitment to market reform.

The final point we can make here is that the new regulations are part of a wider movement to reform the PRC securities and mergers and acquisitions markets.

The QFII Tentative Procedures should not be seen as a stand-alone piece of legislation. In recent weeks, the CSRC has issued a flurry of important new regulations. These include the Transfer of State Shares and Legal Person Shares in Listed Companies to Foreign Investors Circular² (lifting the 1995 moratorium on foreign investors purchasing unlisted State-owned shares and legal person shares of listed PRC companies) and the Administration of the Takeover of Listed Companies Procedures³ (which set out ground rules for acquisition of controlling interests in listed companies). Around the same time, the State Economic and Trade Commission promulgated the Use of Foreign Investment to Restructure State-owned Enterprises Tentative Procedures.⁴ Additional important legislation is in the pipeline, with reports in the Chinese press of MOFTEC entering into the consultation phase for the forthcoming Administrative Measures on Acquisition of Equity Interests or Acquisitions of Assets in Domestic Enterprises by Foreign Investors. It is encouraging to see that China is making such rapid progress towards opening up the domestic market to foreign investment and, at the same time, towards bringing its regulatory framework on mergers and acquisitions and public takeovers into line with international norms.

WHAT DO THE NEW RULES MEAN FOR FOREIGN INVESTORS?

The QFII Tentative Procedures break new ground by setting up, for the first time, the legal machinery for foreign investors to access the A share and bond markets. Still, they only represent a partial opening of the market. Only approved QFIIs and not foreign individuals will be able to directly access and purchase A shares and other financial instruments available under the scheme, however the latter may be able to access the market indirectly through products designed by QFIIs. This is in line with the "step-by-step" approach to liberalization of the PRC securities market adopted by the CSRC and the PRC authorities, the aim of which is to minimize any potential for market disruption caused by introducing radical changes and to allow the lessons learnt from each stage to be carried forward.

It should also be borne in mind that there are restrictions on the size (measured in percentages and monetary terms) of investments made by QFIIs. The monetary limits are set out in the State Administration of Foreign Exchange (SAFE) Administration of Foreign Exchange for Securities Investments in the PRC by QFIIs Tentative Provisions issued on November 28 2002 and effective December 1 2002 (the QFII Forex Provisions). These provide that the minimum investment limit that has to be applied for by a QFII is US$50 million, while the maximum is US$800 million. The Implementing Regulations specify that the percentage of shares held by a single QFII in a single listed company cannot exceed 10% of the total A shares in that company and similarly the aggregate percentage of shares held by all QFIIs in a single listed company must not exceed 20% of the total A shares in that company. However, these percentages are subject to "adjustment" by the CSRC.

Under the Implementing Regulations, shares held by a QFII or by two or more QFIIs collectively at the end of each trading day that are in excess of the 10% or 20% cap, respectively, must be resold in the market following the issue of a "sell down" notice. The sell down notice is sent by the relevant stock exchange to the QFII's securities trading company and custodian (not, on the face of it, to the QFII), and requires the QFII to reduce its shareholding to below the shareholding cap. The timing is slightly curious, as the obligation is on the QFII to sell down within five trading days of receipt of the sell down notice, but it is unclear what happens if the custodian and securities company fail to pass on the notice to the QFII. Where the collective cap is breached, the excess shares must be resold on a "last in first out" principle unless, within those five trading days, another QFII has voluntarily reduced its shareholding in the listed company so that the aggregate shareholding falls below the collective cap. In this event only, the original QFII may then apply to the relevant stock exchange to maintain its original shareholding in the listed company. On the aggregate percentage of shares held by all QFIIs in any single listed company reaching 16% of the A shares in that company, and thereafter on any further increases of 2%, the relevant stock exchange is required to publish the number of shares and the corresponding shareholding held by each QFII in the listed company on the relevant stock exchange's website at the end of that trading day.

Investments made by QFIIs still have to comply with the Foreign Investment Industrial Guidance Catalogue (外商投资产业指导目录),⁵ so one cannot use the scheme to skirt round equity caps under WTO commitments or to invest in "prohibited" category companies. There is however a question mark as to whether, and to what extent, QFII shares count towards the "foreign investment percentage" cap in industries where WTO commitments or other foreign investment caps apply.

As the name suggests, when regulations are issued as "tentative", it often indicates that they should be seen as the first attempt to legislate in a new area. They may at a later date be replaced by more comprehensive legislation, once the legislation has been tested and the underlying regulatory processes have had time to adjust.

WHO QUALIFIES TO BECOME A QFII?

According to the QFII Tentative Procedures, a QFII must be a fund management institution, an insurance company, a securities company or another type of asset management institution. Interestingly, the standard QFII application form has a section for "other types of institution" to apply but it is not clear what type of institution is meant by this, or the applicable criteria for such institutions. The specific qualification criteria applicable to each specified type of institution are set out in the table below.

The CSRC expressly reserves the right to "adjust" the above qualification criteria in the QFII Tentative Procedures in the light of developments in the securities market, suggesting that the figures may be looked at again based on the initial response (or lack thereof) by the international foreign investment community to the QFII scheme. By the same token, this power also gives the CSRC the discretion to increase or decrease levels of foreign investment to meet specific policy goals or perhaps to deal with a specific threat or crisis, although tightening existing criteria is likely to give rise to practical problems for existing QFIIs.

As with its rules on establishing foreign-invested financial institutions in China, China seems to have set quite high entry barriers for QFIIs. This is presumably driven by the desire to limit participation to the big name institutions and by concerns about the ability of QFIIs to meet their investment obligations. It is interesting that the CSRC and PBOC have chosen identical qualification criteria for securities houses and insurance companies that, notably, require them to have been operating for 30 years or more, while there is no track record requirement for commercial banks. Presumably the logic is that a bank does not become one of the top 100 worldwide in terms of assets without having been around for many years. There is no index or list for banks to use to prove that they belong to the world's top 100 in assets. This may be problematic for some institutions given that not everyone calculates assets in the same way. Also, there is no indication of what type of assets can be used to satisfy the criteria. Are they pure banking assets? Or financial services or securities?

China has, rightly or wrongly, adopted a "bigger is better" approach for the financial services industry. Smaller and more recently established financial institutions may again have reason to feel disappointed with these criteria, which take size and longevity rather than merit or financial performance as the starting points. Smaller institutions may find themselves excluded from establishing a direct presence in China for the same reasons.

In addition to the above, the QFII applicant must satisfy the following criteria:

• an applicant must be financially stable, enjoy good credit, satisfy the asset size test and other CSRC requirements (i.e., those set out in the table below);
• the applicant's risk control and monitoring standards must meet the legal requirements and the relevant securities markets regulators' requirements in its country or region of establishment;
• the applicant's professional staff who engage in the business must hold the relevant professional qualifications in the relevant country or region;
• the applicant must have a sound corporate governance structure and a comprehensive set of internal controls, its operations must be carried out in accordance with applicable law, and in the last three years it must not have been subject to any material sanctions by any regulator in the relevant country or region where it is established;
• there must be a comprehensive legal and supervisory system in place in the applicant's country or region of establishment, its securities supervision and management institutions must have entered into a memorandum of understanding on cooperation in matters of supervision and management with the CSRC, it has maintained an effective regulatory cooperation relationship with the CSRC; and
• other requirements laid down by the CSRC based on prudential regulatory principles.

It is predictable but disappointing to see the traditional "sweep up" provision included as the last item in the above list. Hence the above criteria cannot be seen as exhaustive or definitive and can be augmented by other items at the CSRC's discretion, even if the CSRC has limited its discretion to imposing requirements based on prudential principles. Indeed the QFII and custodian application forms both list "other documents required by the CSRC and PBOC (for custodians only) or SAFE" as the last item on the list of attachments to be submitted with the application, thus presumably leaving it open for any of these to request further documents.

Priority treatment in terms of selection of QFIIs will be given to closed-end China fund institutions, or insurance, collective or pension fund management institutions, with good track records in other markets in order to encourage long-term investment in the China market.

OTHER SPECIFIC REQUIREMENTS

The applicant QFII must entrust a commercial bank within China to act as custodian of its assets and entrust a securities company within China to carry out its securities trading activities within the PRC.

Essentially this means that a QFII cannot carry out trading activities in its own right, and hence it cannot control execution risks such as the timing of trades and communication of orders. The custodian requirements mean that assets acquired by QFIIs will have to be physically held in China, thus making them potentially vulnerable to loss, misuse or fraud in the hands of the custodian. Offshore liquidators or receivers of the QFII may, therefore, find it difficult to get access to QFII assets.

It is also curious that there is an entire chapter of the QFII Tentative Procedures devoted to the appointment and the qualifications of custodians and to the approvals needed to act as a custodian, as well as an entire set of additional implementing regulations issued by the China Securities Depository and Clearing Corporation Limited (CSDCCL)⁷ in relation to QFII registration and settlement that is almost exclusively devoted to the duties and obligations of the custodian vis ?vis the securities clearing company. However, there appears to be little express regulation of the QFII - securities trading company relationship and no qualification criteria for acting as securities trading brokers in relation to QFIIs other than being a member of the relevant stock exchange. The only substantive provisions affecting the securities company entrusted by the QFII in the Settlement Implementing Rules deal with: a general obligation to perform its obligations diligently and to report on irregularities in the QFII's trading activities; reversing a situation where the securities company has, due to its own error, mistakenly made a trade on behalf of the QFII;⁸ implementation of orders issued by the judicial or other empowered organs to investigate, freeze, unfreeze, etc. the securities assets owned by QFIIs; and the carrying out of transfers pursuant to decisions of courts or arbitration rulings.

This disparity in terms of obligations is only partially explained by the wide-ranging set of duties and responsibilities of the custodian vis-à-vis the QFII as compared with the relatively minor role played by the securities company in relation to the QFII's activities. Undoubtedly, many of the obligations of the securities trading company have been set out in the PRC Securities Law (中华人民共和国証券法)and the Administrative Procedures for Securities Companies. But another view is that as many of China's securities houses have not been very profitable in the last few years, any attempt to impose qualification or other onerous compliance requirements would have disqualified many of them from what is seen to be a potentially lucrative new business. Given that at the time of writing no foreign-invested securities joint venture companies have been officially approved by the CSRC, it seems likely that at least initially the choices in this area for QFIIs are likely to be fairly limited.

However, it is encouraging that under the QFII Tentative Procedures branches of foreign commercial banks with more than three years of operating experience in the PRC and who meet various qualification criteria can apply to act as custodians. Given the onerous obligations imposed on QFII custodians, these applicants will still have to weigh up carefully the risk-reward profile. For example, under the Settlement Implementing Rules custodians are required to have taken effective measures to ensure that their electronic settlement systems are secure. They must also pay a settlement deposit to guard against settlement risk and as part of the risk sharing principle, and they must contribute to the securities settlement risk fund pursuant to the Administration of Securities Settlement Risk Funds Tentative Procedures.⁹ There are also various sanctions for custodians who are overdrawn or who allow their QFIIs to engage in short selling. The clearing institution also has the right to impose special supervision over custodians with high risk profiles and can "when necessary" require the custodian to increase the settlement security deposit amount.

For overseas commercial bank applicants, the paid-up capital of their headquarters outside the PRC will be used to determine whether they satisfy the paid-up capital requirements in this regard. The CSRC, the PBOC and SAFE must approve the application submitted by potential custodians. One qualification in this regard is for the custodian to be a bank qualified to engage in RMB and foreign exchange business.

Application Method

Assuming that the potential QFII applicant can satisfy all of the qualification criteria, it must first submit a standard application form¹⁰ and a specified list of documents to the CSRC in order to gain approval as a QFII. The application form is notable for the fact that it appears to expressly impose joint liability on the board of directors of the applicant and personal liability on each board member for any "falsehoods, misleading statements or material omissions" and for the truthfulness, accuracy and completeness of its contents. This is particularly onerous, and appears on the face of it to be China's reaction to recent external events such as the Enron and WorldCom scandals. It brings to mind the SEC's recent moves to get chief executives of listed US companies to take personal responsibility for their corporate accounts. The list of application documents includes, among others, those showing it meets the relevant qualification criteria, a draft custodian agreement, audited accounts for the last three years and a letter of undertaking promising not to withdraw funds during the restricted period. These documents are, according to the QFII Tentative Procedures, not submitted directly to the CSRC and SAFE, but via the appointed custodian.

Certain potential QFIIs have expressed concerns that applications would be delayed pending approvals of custodians. It is unclear whether the CSRC will accept applications submitted directly pending approval of the application from the custodian. It appears that approvals are required at the central level as there is no reference in the QFII Tentative Procedures to making applications to local branches of these bodies. This is presumably due to the fact that the applicant may not have established any presence in China. Documents written in English must be accompanied by a Chinese translation or a Chinese summary. This again demonstrates the CSRC's pragmatic approach; many PRC government bodies insist on full translations of documents in a foreign language. This is notably the case with all documents submitted to the CSDCCL under the Settlement Implementing Rules.

HOW LONG DOES IT TAKE?

The CSRC has 15 working days, commencing from the date on which it receives a complete set of application documents, to approve or reject an application. Approval means that the CSRC issues a securities business investment permit (QFII Permit) and notifies the applicant in writing. Once the applicant has obtained the QFII Permit, it needs to make an application via the PRC custodian to SAFE to have its investment limit approved. As mentioned above, under the QFII Forex Provisions, QFII applicants are required to apply for an investment limit not lower than US$50 million and not exceeding US$800 million. Commentators have suggested that the ceiling would not be a problem for prospective QFIIs but that the floor might be particularly problematic for small and medium-sized QFIIs. SAFE has 15 working days from the date of receipt of a complete application to approve or reject the application. Approval by SAFE leads to the issue of a notification of the investment limit and a foreign exchange registration certificate.

Compared to the approval timelines for other industry sectors, these seem to be quite reasonable and workable. If the applicant fails to get a foreign exchange registration certificate within one year of obtaining the QFII Permit then the QFII Permit automatically lapses.

HOW WILL QFIIS OPERATE IN PRACTICE?

Once the QFII has obtained SAFE approval for its investment limit, it can open a special purpose RMB account with its custodian. This account is used to hold the conversion proceeds in RMB of the original foreign exchange funds paid in by the QFII and is used to fund purchases and other related costs as well as holding proceeds of disposals. QFIIs are required to remit the full amount of principal in the foreign currency approved by SAFE into the PRC for conversion into RMB, and transfer into the RMB special purpose account within three months of the issue of a QFII Permit.

The QFII must also instruct its custodian to open on its behalf a securities account with the securities registration and settlement (i.e., clearing) institution (the CSDCCL) and an RMB settlement account with the CSDCCL for settlements with that institution. The limitation to opening a single account is potentially problematic. A number of QFIIs and foreign bank custodians are reportedly lobbying the CSRC to allow sub-accounts to be opened with the CSDCCL in order to hold securities held by the QFII, but which are beneficially owned by different parties.

The reason for this is that QFIIs will be mainly acting as fund managers and broker dealers managing other people's assets when they invest and the concern is that if the QFII defaults, in the absence of sub-accounts separating proprietary and client assets, the client assets in China may be frozen.¹¹

The Settlement Implementing Rules provide detailed rules on the documents to be submitted by the custodian to open a securities account with the CSDCCL. These rules also provide detailed provisions on the documents to be submitted by the custodian in order for it to open a settlement reserve payment account with the CSDCCL that is used for settling trades by the custodian's QFIIs. The custodian is also required to select one of the CSDCCL's designated settlement banks at which to open a settlement funds special deposit account, the opening of which must be reported to the CSRC and SAFE for the record and which, on receipt of the reply acknowledgement, serves as the CSDCCL- designated collection account. Only through this account can the custodian transfer in funds from the settlement reserve payment account or transfer funds out to the settlement reserve payment account. The settlement reserve payment account must maintain a minimum end of day balance not lower than the level stipulated by the CSDCCL.

It is not entirely clear on the face of the relevant regulations how all the accounts fit together or the exact flow of funds between them and other clearing parties. We know from the QFII Tentative Procedures that a QFII is required to open an RMB special purpose account with its custodian, which is used for paying outgoings for purchases and receiving proceeds of trades. The QFII is also required to instruct its custodian to open a securities account and an RMB settlement account with the CSDCCL on its behalf. It gets trickier when it comes to identifying where in the Settlement Implementing Rules these references are picked up. The references to the securities account part are relatively straightforward, but which of the "settlement funds collection account" and the "settlement reserve payment account" is the "RMB settlement account" referred to in the QFII Tentative Procedures? It appears from our informal enquiries with the CSDCCL Shanghai branch that this refers to the settlement reserve payment account. This account is opened in the name of the custodian, as the Settlement Implementing Rules refer to the requirement that the name of the account must be consistent with that of the custodian.

The CSDCCL works out how much the custodian is to pay or receive in relation to QFII trades and puts the data into the settlement system at the end of the trading day. It is then the custodian's obligation to settle up accordingly. The CSDCCL debits or credits the securities account of the QFII in the evening of the trading day in question. Cash settlement takes place at 5.00 pm on the day after the trading day on which the trade took place (i.e., T+1 settlement).

The QFII Tentative Procedures are silent on the relationship between the QFII and the securities trading house it is required to appoint to execute trades. Presumably this is governed primarily by contract. The Settlement Implementing Rules appear to confirm this as the contract between the QFII and the relevant domestic securities company is one of the documents required to be handed over by the custodian to the CSDCCL the first time it applies to open a securities account for a QFII. QFIIs can also appoint a securities firm in the PRC to manage its securities investments in the PRC.

Investment Targets

QFIIs can invest within their approved investment limits in any of the following RMB-denominated financial instruments:

• shares listed on the domestic stock exchanges (except for foreign investment, or B shares, listed on a domestic exchange);
• treasury bonds listed on the domestic stock exchanges;
• convertible bonds and corporate bonds listed on the domestic stock exchanges; and
• any other financial instruments approved by the CSRC.

It is puzzling to note that under the Implementing Regulations, QFIIs cannot participate in treasury bonds repurchase and corporate bond trading because of "technical reasons" as, based on the QFII Tentative Provisions, the market had assumed these would be included in the scope of QFII from the outset. The Implementing Regulations do not specify what the technical difficulties are nor do they provide for any timeframe within which such technical difficulties are to be resolved. This is unfortunate for prospective QFIIs as, given the aforementioned very high P/E ratios on which most A shares are currently trading, treasury and corporate bonds market were viewed as one of the more attractive parts of the QFII regime.

Exit Restrictions

There are lock-in periods for the funds remitted into the PRC by the QFII and held in the RMB special purpose account. In the case of a closed-end China fund management institution, the QFII can only apply to SAFE for the purchase of foreign exchange to remit to the offshore QFII three years after remitting the principal. For other types of QFIIs, the stipulation is one year after remittance of the principal. Even after the lock-ups expire, each outward remittance cannot exceed 20% of the total principal and each must be made at one month (for a closed-end China fund QFII) and three-month intervals (for all other QFIIs), respectively. A QFII that has remitted its investment principal into the PRC for over three months but less than one year can assign its investment amount to another QFII or another qualifying applicant, subject to CSRC and SAFE approval. There are also procedures laid down whereby a QFII can instruct its custodian to apply to SAFE to purchase foreign exchange for remittance of any after-tax profits realized in any preceding accounting year. The recipient of the offshore remittance of principal or of profits must be the QFII itself.

QFII's Ongoing Obligations

The CSRC and SAFE will carry out an annual inspection of the QFII Permit and Foreign Exchange Registration Certificate issued to each QFII. Failing such inspection will lead to the QFII Permit and Foreign Exchange Registration Certificate becoming invalid.

CONCLUSION

The introduction of the QFII scheme is a very welcome development and an encouraging sign that the mainland is committed to reforming and opening up its securities markets to foreign investment. While the effects may take time to work their way through the system, the advent of the QFII system does represent the dropping of yet another barrier to the full integration of the PRC securities market with international securities markets. In addition, the regulations provide new investment choices, structures and opportunities for foreign investors in China. The regulations are seen by many as the necessary precursor to the proposed mirror image scheme (the Qualified Domestic Institutional Investor Scheme) to allow domestic PRC institutions to invest in overseas stock markets, with the Hong Kong stock market expected to act as the testing ground for the scheme.

The introduction of foreign institutions as shareholders in domestically listed A share companies (and hopefully over time as participants in the bond markets) is likely to have a positive impact on the stability of the PRC securities market over the medium to long term, and ultimately on the way that PRC companies see compliance and corporate governance issues. QFIIs have a role to play in this by making investment conditional on companies meeting internationally applicable baseline compliance and governance standards. It is hoped that if PRC issuers of debt and equity instruments see attracting investment from one of the world's leading financial institutions as a badge of confidence in their company and a means of supporting their share or bond prices, they may also be motivated towards meeting those standards to which the QFII aspires.

A final note of caution: China has, in the time-honoured tradition, made its first foray into this area using a very gradual and conservative approach. This caution can be traced back to concerns about the damage done elsewhere by alleged speculative trading activities by foreign investors during the Asian financial crisis. While the QFII Tentative Procedures were generally received quite positively by foreign investors, the recent Implementing Regulations and QFII Forex Provisions seem to mark something of a retreat both in terms of reducing the scope of securities available and in terms of imposing upper and lower limits on the amounts invested. It is hoped that some of the current restrictions on QFIIs in terms of qualification criteria will be relaxed over time to allow in as wide a variety of foreign capital as possible and to increase competition. We also hope that further reforms will give QFIIs even greater control over their investments by allowing them to appoint offshore custodians and to engage in securities trading on their own account.

ENDNOTES

1 RMB-denominated shares issued by PRC companies that are listed on one of the two domestic stock exchanges in Shanghai and Shenzhen.

2 Jointly issued by the Ministry of Finance (MOF), the CSRC and the State Economic and Trade Commission (SETC) and effective November 1 2002.

3 Issued by the CSRC and effective December 1 2002.

4 Issued by the SETC, the MOF, the State Administration of Industry and Commerce and SAFE, and effective January 1 2003.

5 Promulgated on March 11 2002 and effective April 1 2002.

6 The Chinese expression is, according to the Civil Law General Principles (CLGP) interpreted to include the number in question. The QFII Tentative Procedures do not provide any indication of whether it means "over five years" or "five years or more" in this context, so the exact meaning is unclear. We have followed the CLGP interpretation for the purposes of this article.

7 The China Securities Depository and Clearing Corporation Limited Qualified Foreign Institutional Investors Investing in Domestic Securities Markets Securities Registration, Clearing and Settlement Implementing Rules (the Settlement Implementing Rules) effective December 1 2002.

8 Article 13 of the Settlement Implementing Rules.

9 Issued by the CSRC and the MOF and effective April 4 2000.

10 The CSRC published a standard application form on its website (www.csrc.gov.cn) on November 30 2002.

11 "QFII scheme participants seek change," South China Morning Post, December 10 2002.