China regulator drafts QFII, RQFII ‘merger’ plans

Alwyn Li commented on China’s plan to harmonise QFII and RQFII rules in the Asian Investor.

According to the Asian Investor, the CSRC is planning to merge QFII and RQFII into one legal regime and draft rules for the merger of the QFII and RQFII schemes will soon be published by China’s financial regulator. In addition, QFII funds could also enjoy the higher levels of liquidity and looser subscription and redemption rules which RQFII funds currently enjoy. Currently, QFII funds can only repatriate or remit assets on a weekly basis, and in certain cases need approval from the State Administration of Foreign Exchange.

Alwyn praised the move to boost QFII schemes, which may become more popular since global investors could use dollars to invest instead of the less liquid offshore renminbi scheme under RQFII.

“The two schemes are quite different,” he said. “If you look at what happened, the first batch of RQFII holders went back to apply for QFII so as to offer a wider variety for their clients.”

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Alwyn Li

Partner | Financial Services

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