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China Expands RQFII Regime

May 15, 2013

By DAVID LIVDAHL, JENNY SHENG, & CHUNBIN XU

Following the recent expansion of the total investment quota for Renminbi Qualified Foreign Institutional Investor (“RQFII”) from RMB20 billion to RMB270 billion, on March 1, 2013, the China Securities Regulatory Commission (the “CSRC”), the People’s Bank of China (the “PBOC”) and the State Administration of Foreign Exchange (the “SAFE”) jointly issued The Pilot Measures on Securities Investment in Mainland China by Renminbi Qualified Foreign Institutional Investors (the “New RQFII Measures”). The CSRC, on the same day, issued The Provisions on the Implementation of the Pilot Measures on Securities Investment in Mainland China by Renminbi Qualified Foreign Institutional Investors (the “New RQFII Provisions”, together with the New RQFII Measures, the “New RQFII Regulations”). The New RQFII Regulations replaced the two previous regulations on RQFII program issued in late 2011 (the “Old RQFII Regulations”) with several significant changes. Major changes include the expansion of scope of RQFII applicants, the relaxation of the source of RMB funds, simplified application documents and the expansion of permissible investments by RQFIIs. This article will briefly summarize the aforementioned major changes brought by the New RQFII Regulations.

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