On March 6, 2013, the China Securities Regulatory Commission released the Pilot Measures on Domestic Securities Investment by RMB Qualified Foreign Institutional Investors and its implementation regulation (the “New RQFII Rules”), signifying that the RQFII Pilot Program has entered into a new phase of development. Compared with the Pilot Measures on Domestic Securities Investment by RMB Qualified Foreign Institutional Investors for Fund Management Companies and Securities Companies and its implementing regulation (the “Original RQFII Rules”), the New RQFII Rules have mainly expanded the scope of pilot institutions, relaxed restrictions on the scope of permissible investment products, and simplified application qualifications and documents.
Expand the Scope of Pilot Institutions
Pursuant to the New RQFII Rules, the pilot institutions have been currently extended to include Hong Kong subsidiaries of Mainland Chinese commercial banks and insurance companies, as well as financial institutions that are registered and have major operations in Hong Kong. Under the Original RQFII Rules, pilot institutions were limited to Hong Kong subsidiaries of Mainland Chinese investment funds and securities brokerages.
The involvement of more types of pilot institutions will help to promote positive competition as well as further development of the RQFII Pilot Program.
Relax Restrictions on the Scope of Permissible Investment Products
The New RQFII Rules have removed restrictions on the proportion of investments in equities and fixed income securities previously imposed by the Original RQFII Rules, allowing pilot institutions to allocate the investment quota at their own discretion. Furthermore, the New RQFII Rules have specified stock index futures as one of the permissible RMB investment products.
Following the implementation of the New RQFII Rules, pilot institutions will be allowed to invest 100% of their capi