Jurisdiction - China
Reports and Analysis
China – QFII License Applications To Be Made Easier.

5 July, 2012

 

On June 20, 2012, the China Securities Regulatory Commission published a draft revision to the Notice on Relevant Issues Concerning the Implementation of the Measures for Administration of Securities Investment in China by Qualified Foreign Institutional Investors (“QFII”). The public is permitted to submit comments on the draft until July 5, 2012. The draft revision lowers the threshold for QFII license application in relation to length of business operation and level of securities assets. Under the current practice, to apply for a QFII license, a qualified fund management institution or insurance company applicant must have been operational for more than 5 years, and a qualified securities company applicant must have been operational for more than 30 years. The time requirement has been reduced to 2 years and 5 years respectively under the draft revision, while the minimum securities assets requirement has been lowered to US$ 500 million from US$ 5 billion for fund management institution and insurance company applicants, and lowered to US$ 5 billion from US$ 10 billion for securities company applicants. For commercial bank applicants, the requirement on “top 100 world-wide ranking of total assets” has been removed. Instead, commercial bank applicants must have operated for more than 10 years and have first-class capital of no less than US$ 300 million and securities assets of no less than US$ 5 billion. In addition, the draft permits QFIIs to invest in stock index futures and bonds traded in inter-bank bond market in China. The shareholding ratio cap of A shares of a single PRC listed company by a QFII has been increased from 20% to 30%.

 

The full Chinese text of the draft revision is available here

 

 

For further information, please contact:

 

Elizabeth Cole, Partner, Orrick

ecole@orrick.com
 
Thomas Man, Partner, Orrick
tman@orrick.com
 
Brad Herrold, Orrick
bherrold@orrick.com
 
Veronica Lockyer, Orrick
vlockyer@orrick.com
 
Yan Zeng, Orrick
yzeng@orrick.com
 

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