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Measures for the Administration of Securities Investment in China by Foreign Institutional Investors (17/04/2007)


1. When was it promulgated?

The Measures for the Administration of Securities Investment in China by Foreign Institutional Investors (the “Measures”), which were deliberated and adopted at the 107th chairman’s executive meeting of China Securities Regulatory Commission, the 4th governor’s meeting of People’s Bank of China and the 5th director general’s executive meeting of the State Administration of Foreign Exchange, were implemented on September 1, 2006.

2. What is the meaning of QFII?

The term of qualified foreign institutional investors (“QFII”) as mentioned in the Measures refers to the foreign fund management institutions, insurance companies, securities companies, and other asset management institutions that invest in China’s securities market in accordance with the provisions of the Measures after being approved by the China Securities Regulatory Commission (“CSRC”) and granted an investment quota by the State Administration of Foreign Exchange (“SAFE”).

A QFII shall appoint a Chinese commercial bank as its trustee to administer its assets and a Chinese securities company to engage in its securities transactions in China on its behalf.

3. What is the qualification, examination and approval procedure for QFII?

The Measures set out the qualifications required, the examination and approval
procedures for a QFII, the qualifications and duties of the trustee, and the procedures for securities registration and settlement. The Measures also prescribe that a QFII may invest in such RMB financial instruments as approved by the CSRC to the extent that the investment amount does not exceed the aforesaid quota. Upon approval by SAFE, a QFII must then open a foreign exchange account and a special RMB account with the trustee.

CSRC issued a Notice on the same day to clarify and supplement the Measures, these provisions including the asset value threshold for various types of QFII, the application documents required to be filed by a QFII and the trustee, the list of RMB financial instruments in which a QFII is allowed to invest and the limits on foreign shareholdings in domestic securities, etc.

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