QFII/RQFII Investment Quotas Removed by PBOC & SAFE

On May 7, 2020, The People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) issued the Regulations on Funds of Securities and Futures Investment by Foreign Institutional Investors (PBOC & SAFE Announcement〔2020〕No. 2, hereinafter referred to as the Regulations), to standardize and simplify administrative requirements on the remittance and repatriation of funds as well as currency exchanges by foreign institutional investors, aiming to better facilitate foreign investors’ participation in China’s financial market.

The key points of the Regulations are as follows:

  1. Restrictions on investment quota of Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors (hereinafter referred to as Qualified Investors) are removed. Qualified Investors will no longer need to apply for any investment quota from SAFE. Instead, they shall entrust their main custodians to make a registration with the SAFE.

  2. Qualified Investors may choose currencies and the timing of inward remittance on their own decisions.

  3. The procedures for Qualified Investors’ repatriation of securities investment income are significantly simplified, replacing special audit report on investment returns issued by a Chinese certified public accountant and tax clearance or tax filing certificates with Tax Commitment Letters signed by Qualified Investors.

  4. The limits on the number of custodians are scrapped. A single Qualified Investor may choose multiple domestic custodians, and appoint one custodian as the main custodian.

  5. Foreign exchange risk and investment risk management mechanism for Qualified Investors' domestic securities investment are further improved.

  6. The PBOC and the SAFE will strengthen the on-going and ex-post supervision.

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