PBC and SAFE Optimize QFII/RQFII Cross-Border Fund Management

On July 26, 2024, the People’s Bank of China (PBC) and the State Administration of Foreign Exchange (SAFE) released the revised Provisions on the Management of Securities and Futures Investment Funds of Overseas Institutional Investors in China (the “Provisions”), which will come into effect on August 26, 2024.

The newly revised Provisions make the following revisions: 1. further simplifying the procedures for business registration. The revised Provisions specify that QFII/RQFII business registration shall be handled through principal reporters (custodians) on SAFE’s digital foreign exchange management platform, while clarifying the matters of change registration and cancellation registration; 2. further optimizing account management. It is stipulated that RMB special deposit accounts used for securities trading or derivative trading may be merged to reduce the number of accounts required for operating entities to make different types of investments; 3. further improving exchange management. The revised Provisions optimize QFII/RQFII cross-border fund flow management and improve the principles of currency management for incoming and outgoing funds; and 4. unifying the foreign exchange risk management models of QFII/RQFII and the China Interbank Bond Market (CIBM Direct). It is specified that QFII/RQFII may handle spot foreign exchange settlement and sales, as well as foreign exchange derivative transactions through more channels other than custodians, such as domestic financial institutions and interbank foreign exchange markets which are qualified to conduct foreign exchange settlement and sales businesses.