China QFII Rules Revised - Significant Developments for Foreign Fund Managers

October 31, 2006 | BY

clpstaff &clp articles

The newly revised QFII rules aim to lower the entry threshold and allow more QFIIs into China's capital market. What investment restrictions have been lifted? Are there significant improvements to the original rules?

By Taylor Hui and Vivien Teu, Deacons, Hong Kong

On August 24 2006, the China Securities Regulatory Commission (CSRC), People's Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) jointly issued the new Measures for the Administration of Securities Investments in China by Qualified Foreign Institutional Investors (New QFII Rules) that govern the regime allowing foreign institutions approved by the CSRC as qualified foreign institutional investors (QFIIs) to invest in China A-shares and other renminbi-denominated securities in the People's Republic of China (PRC), subject to the grant of investment quotas by SAFE.

The New QFII Rules, effective from September 1 2006, supersede the original QFII rules that have been in place since 2002. The CSRC also issued a notice relating to the implementation of the New QFII Rules (Implementing Notice) that took effect from the same date.

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