Regulator clarifies QFII rules
By Zhang Ran (China Daily)
Updated: 2006-09-28 09:13
The China Securities Regulatory Commission (CSRC) yesterday released a
detailed explanation of its recently issued rules on qualified foreign
institutional investors (QFIIs).
Along with the People's Bank of China
and the State Administration of Foreign Exchange, the CSRC last month issued a
new administrative rule on the investment of QFIIs, which was based on the
revision of the 2002 version. The CSRC said that the new rule is aimed at
lowering the threshold to allow more QFIIs to enter China's capital market in
accordance with the country's commitment to further open its financial
sector.
According to earlier restrictions, QFIIs investing in Chinese
securities had a capital lock-up period of as long as one-year, and one QFII
could only establish one securities investment account and hire one securities
firm as its transaction agent.
With the new rule, the capital lock-up
period for pension funds, insurance companies and mutual fund is cut to three
months.
"In order to encourages long-term investment in the securities
market, the rule lowered the standards for institutional investors, including
fund management companies and insurance companies managing long-term fund
assets," the CSRC said yesterday.
"The new rule will attract more fund
management companies, which have a more conservative investment strategy
compared to securities firms, to enter China's capital market by loosening
restrictions on certain aspects," said Zuo Xiaolei, chief economist at Galaxy
Securities.
The rule also allows QFIIs to establish an investment
account by themselves if the fund they manage is for a long-term
investment. (For more biz stories, please visit Industry Updates)
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