China decided to scrap quota restrictions on two major inbound investment schemes in a bid to further facilitate foreign institutional investors' participation in the country's financial market, authorities said Thursday.
The plans set to lift the investment quota restriction for the Qualified Foreign Institutional Investors (QFII) program and its yuan-denominated sibling, RQFII, in a bid to further widen the investment scope for overseas investors.
The new rules aim to clarify and simplify management requirements for foreign institutional investors when engaging securities and futures investment funds in China and further facilitate the participation of foreign investors in the Chinese financial market, said a joint statement from central bank People's Bank of China and the State Administration of Foreign Exchange.
QFII and RQFII were adopted in 2003 and 2011, respectively, in an effort to gradually open China's capital market.
The authorities have canceled the quota restrictions of the two major inbound investment schemes and replaced it with registration-based rules for qualified investors when they make cross-border funds transfer or currency exchange.
In addition to liberalizing QFII / RQFII investment quota restrictions, the new rules also provide more convenience to qualified investors.
The related authorities will implement integrated management of local and foreign currencies in domestic securities investments, allowing QFII to freely choose which currency and when they remit money to the country.
Furthermore, China will also simplify outward remittance procedures for QFII's securities investment gains and lift other restrictions. The new rules canceled the requirements for materials such as special audit reports on investment income and tax filing forms issued by Chinese certified public accountants and replaced them with tax payment commitment letters.
The number of qualified investor custodians has also been removed, allowing a single qualified investor to entrust multiple domestic custodians and implement a central reporting system.
(Cover via VCG)