China further opens up domestic financial market for foreign investment

China’s new QFI investment scheme is set to make it easier and more streamlined to gain access to its capital markets, providing a new set of opportunities for foreign investors.
By China Construction Bank

Sponsored by China Construction Bank (CCB)

Aiming to boost foreign investor engagement with China’s domestic capital markets, China has announced a series of rules for the Qualified Foreign Institutional Investor (QFII) and RMB QFII (RQFII) programmes. 

The QFII and RQFII have now been integrated into one Qualified Foreign Investor (QFI) scheme. China’s capital markets regulators released the new Measures and implementary provisions for QFI on 25 September, 2020. They have attracted a high number of global investors since these new rules came into effect on 1 November, 2020.

The QFI scheme has relaxed the qualification requirements and facilitated QFI investment with a streamlined application procedure and simplified application documents. The investment scope for QFIs has also been expanded significantly. Besides the existing investment opportunities, QFIs may now invest in additional asset types in the Chinese domestic markets. These include securities listed on the National Equities Exchange and Quotations (NEEQ) market, private investment funds, financial futures, commodity futures, options, etc. They may also participate in bond repurchase transactions, margin trading and securities financing on stock exchanges as well as securities lending to securities finance companies.

In terms of the funds management rules for QFIs, restrictions on investment quota have been removed. QFIs no longer need to apply for any investment quota to the regulator. The currencies and timing of inward remittances may also be chosen by investors.

Enhanced connectivity for foreign investors

The China Foreign Exchange Trade System (CFETS) began providing a direct trading service to foreign investors under the China Interbank Bond Market (CIBM) Direct from 1 September, 2020. Foreign institutional investors may engage in spot trading with domestic market makers through request-for-quotations (RFQ) with quantity only (not including price). Overseas third-party platforms can also connect with the CFETS to provide convenience to foreign institutional investors. 

CCB: Your ideal partner for investing in China 

China Construction Bank Corporation, established in October 1954 and headquartered in Beijing, is a leading commercial bank in Mainland China with a world-renowned reputation. The bank was listed on the Hong Kong Stock Exchange in October 2005 and on the Shanghai Stock Exchange in September 2007. With Total assets of RMB 27.66 trillion in June 2020, CCB is one of the largest banks in the world by market capitalisation. 

CCB began offering custody services in 1998 with the emergence of the mutual fund industry in China. It has been one of the leading custodian banks ever since with assets under custody (AUC) over $ 2.2 trillion. CCB is also a market leader in cross-border custody services. Since 2005, CCB has won over 20 domestic and international custody awards.

As the first Chinese bank to provide custody services to QFIIs, the bank now counts over 100 global investors from 11 countries/regions and four continents as clients. The cross-border custody team, composed of 45 dedicated professionals, guarantees clients local knowledge as well as an understanding of global practice and a close connection with regulatory authorities.