Since China launched the Qualified Foreign Institutional Investors (“QFII”) program approximately ten years ago, the regulators have undertaken several rounds of reform aiming to promote the QFII program. The State Administration of Foreign Exchange (the “SAFE”) has currently issued the Provisions of Domestic Securities Investment by Qualified Foreign Institutional Investors (the “Revised Provisions”) effective as of December 7, 2012. Although SAFE has not advertised the Revised Provisions (publishing them on SAFE’s website approximately one week following their formal promulgation without issuance of news release), the importance of the Revised Provisions should not be under-estimated.
The Revised Provisions respond to foreign investors‘ complaints about the permitted repatriation of proceeds and track the improvements made by the China Securities Regulatory Commission in its Regulation Regarding Certain Issues in the Implementation of the Administrative Measures on Onshore Securities Investment by Qualified Foreign Institutional Investors (the “CSRC Regulations,” about which we issued an alert: China Adopts Final Rule to Ease Regulation on QFIIs) and the Guidelines for Qualified Foreign Institutional Investors Participating in Stock Index Futures Trading recently. This alert outlines the significant changes effected by the Revised Provisions.
1. Repatriation
Consistent with previous SAFE regulations, QFIIs are classified into the following three types for foreign exchange purposes:
Among the QFII repatriation changes, the Revised Provisions substantially increase QFII repatriation frequency. Major changes to the QFII repatriation regime are shown in this chart.
2. Quota
Some foreign investors have complained that the maximum aggregate quota of USD one (1) billion for a QFII is too low in the current market environment. The Revised Provisions adhere to the current restriction, but permit a new exception. Pursuant to the Revised Provisions, the aggregate QFII quota of a sovereign wealth fund, central bank and monetary authority may exceed USD one (1) billion.
According to a checklist published on SAFE’s website, until the end of November 2012, only five (5) QFIIs have reached the existing limit of USD 1 billion — Government of Singapore Investment Corporation, Temasek Fullerton Alpha Pte Ltd, Norges Bank (i.e. Norway’s Central Bank), Hong Kong Monetary Authority, and Qatar Holding LLC. Going forward, all sovereign wealth funds, central banks and monetary authorities may apply for a quota in excess of USD one (1) billion.
3. Fund Accounts
The Revised Provisions substantially reform the rules governing the opening and use of RMB accounts by QFIIs aiming to facilitate (i) QFIIs’ engagement of multiple securities companies as newly allowed under the CSRC Regulations (Please refer to Section 2 (vi) of our alert China Adopts Final Rule to Ease Regulation on QFIIs) and (ii) QFIIs’ investments in stock index futures. A guideline attached to the Revised Provisions provides detailed guidance on how QFIIs must manage and use foreign exchange and RMB accounts.
While the technicalities of the guideline have not been enumerated in this short alert, interested QFIIs should take note of an important deadline. A QFII that intends (i) to open multiple RMB special deposit accounts pursuant to the Revised Provisions and (ii) to split and transfer its clients’ funds from its current RMB special account to the new RMB special deposit accounts, must submit an application to SAFE before June 7, 2013 and complete the transfer of funds in one lump sum following receipt of SAFE’s approval.
4. Summary
The Revised Provisions substantially increase QFII repatriation frequency, provide an opportunity for sovereign wealth funds, central banks and monetary authorities to increase their QFII quota beyond the current limit, and streamline management of QFII accounts. These changes may enable QFIIs to provide more attractive client offerings and give QFII managers more options to structure QFIIs offshore according to the laws of the QFII’s home country. The Revised Provisions demonstrate the Chinese regulators’ efforts to further promote the QFII program and open the Chinese securities market to foreign investors.
国家外汇管理局放宽合格境外机构投资者资金汇出频率限制
自中国启动合格境外机构投资者（“QFII”）试点项目约10年以来，有关监管当局为推动试点项目的发展先后进行过几轮改革。近期，中国国家外汇管理局（“外管局”）发布了《合格境外机构投资者境内证券投资外汇管理规定》（“《修订规定》”），《修订规定》自2012年12月7日起实施。虽然外管局未就《修订规定》进行宣传（在正式发布约一周后，外管局才在其网站公布，且未发布任何新闻稿），但是《修订规定》的重要性不应被低估。
《修订规定》针对外国投资者就被允许的资金汇出的不满进行了回应，并跟进了中国证券监督管理委员会《关于实施〈合格境外机构投资者境内证券投资管理 办法〉有关问题的规定》（“《证监会规定》”，我们曾就《证监会规定》发表题为《中国颁布规定放松对合格境外机构投资者的管制》的评论）以及《合格境外机构投资者参与股指期货交易指引》内所做出的放宽规定。本文旨在概括说明《修订规定》内所作的几项重要修订。
《修订规定》与外管局先前的各项规定保持一致，为外汇管理目的，将QFII分为三类：
《修订规定》对QFII 资金汇出规定进行了修订，包括大幅放宽了允许的资金汇出频率等，具体请见下表.
有些外国投资者提出在当前市场环境下，现行规定的最高10亿美元累计投资额度太低。《修订规定》保留了该额度限制，但新增了一项例外情形。根据《修订规定》，主权基金、央行及货币当局等机构投资额度上限可超过等值10亿美元。
根据外管局网站公布的数据显示，截至2012年11月底，仅有五家QFII达到了现行10亿美元的额度上限，他们分别是新加坡政府投资有限公司、淡马锡富敦投资有限公司、挪威中央银行、香港金融管理局和卡塔尔控股有限责任公司。将来，所有主权基金、央行和货币当局等机构都可申请超过等值10亿美元的投资额度。
《修订规定》对QFII在境内开立和使用人民币账户的规定进行了实质性修订，以便（1）QFII根据《证监会规定》内的最新规定同时委托多家证券公司（参见《中国颁布规定放松对合格境外机构投资者的管制》第2(vi)条）；以及（2）QFII投资于股指期货。《修订规定》同时随附了合格境外机构投资者境内账户管理操作指引，就QFII外汇和人民币账户的管理和使用提供了详细指引。
该指引的具体细节内容在此不予以赘述，但其内规定了一个很重要的截止期限，非常值得感兴趣的外国投资者注意。QFII如果拟定（1）根据《修订规定》开立多个人民币专用存款账户；以及（2）从其现有人民币特殊账户分离并划转客户资金到新开立的人民币专用存款账户的，必须在2013年6月7日前向外管局提出申请，并在取得外管局批准后一次性完成全额划转。
《修订规定》大幅放宽了QFII资金汇出频率，并允许主权基金、央行和货币当局等机构的投资额度超过当前规定的上限，同时也对QFII账户的管理进行了梳理。根据这些修订，QFII将能够向客户提供更具吸引力的产品，并使得QFII管理人在根据其本国法律架构境外QFII方面有更多选择。《修订规定》体现了中国监管当局在进一步促进QFII发展、向外资开放中国证券市场方面所做出的努力。
[1] A set of foreign exchange provisions apply to Open-end China funds (as opposed to their QFII managers). And thus, such funds are deemed as a separate type of QFIIs in this Alert for discussion purpose.
[1] 一系列外汇规定适用于开放式中国基金（而非其QFII管理人)。因此，为讨论的目的，此类基金在本文中被单独视为一类QFII。
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Joseph-Roger
This article was originally published by Bingham McCutchen LLP.