Chinese regulators announced a revamp on Friday of two major inbound investment programs in a further move to ease foreign institutional investors’ access to the country’s capital markets, reported Caixin.
Starting Nov. 1, the Qualified Foreign Institutional Investor (QFII) program and its RMB-denominated sibling, the Renminbi Qualified Foreign Institutional Investor (RQFII) program, will be combined, China’s central bank, national securities regulator and state foreign exchange administrator said in a policy document. The document’s release finalized changes proposed last year.
China launched the QFII program in 2002 and the RQFII program in 2011, allowing foreign institutional investors to trade in the country’s stock and bond markets under certain quotas. But the advantages of the two programs have been diminishing since the launch of the Shanghai-Hong Kong Stock Connect system in 2014 and the Shenzhen-Hong Kong Stock Connect and Bond Connect programs in 2016 gave foreign investors more options to directly invest in the mainland’s financial markets.
QFII and RQFII investors will be offered more investment options, including securities traded on Beijing’s New Third Board, private investment funds, bond repurchase agreements and margin trading, according to the new rules. In addition, foreign institutions will also have access to derivatives, including financial futures, commodity futures and options.