RMB Qualified Foreign Institutional Investor


Established in 2011, the Renminbi Qualified Foreign Institutional Investor program is a policy initiative that allows foreign investors who hold the RQFII quota to invest directly in Mainland China’s bond and equity markets. The program represents a continued loosening of China’s capital controls and departure from its predecessor QFII. The RQFII program relaxes existing restrictions on currency settlement, adds permissible asset classes, and expands investor eligibility. The current RQFII relevant jurisdiction applies to financial organizations registered in Hong Kong, Singapore, the United Kingdom, France, Korea, Germany, Australia, Switzerland, Canada, the United States and Luxembourg.

History

As the second largest economy in the world, China represents a key driver of global growth. Although the Renminbi has been elevated to reserve currency status, only 10.3% of global trade is done through the currency.
Because of this imbalance, the Chinese government has undertaken measures in recent years to open the country’s capital account.
The Qualified Foreign Institutional Investor program was launched in 2002. Primary aims were letting financial institutions outside China invest in China’s stock and bond markets. However, it was limited to certain financial institutions such as commercial banks, securities companies, insurance companies, and securities with no less than $500 million USD.
Acknowledging that further action was necessary, RQFII was jointly established in December 2011 by the China Securities Regulatory Commission, the People’s Bank of China, and the State Administration of Foreign Exchange. It allows subsidiaries of domestic fund management companies and securities companies in Hong Kong to invest in the mainland securities market. Initially, RMB 20 billion of quota was divided among 21 selected financial services firms in Hong Kong. The available quota was increased steadily throughout 2012 during the rollout of Phases II and III of the plan, rising from RMB 50 billion to RMB 70 billion in quota and topping out to 270 RMB billion by the year’s end. Launching Phase IV of the program in 2013 allowed for inclusion of firms based in Singapore and London. 2014 saw inclusion of firms based in Paris and Taiwan.

Available Instruments

The RQFII scheme applies to the following instruments:
The RQFII program is open to two categories of investors:
  1. Applicants in the Relevant Jurisdictions that are subsidiaries of Chinese fund management companies, Chinese securities companies, Chinese commercial banks, and Chinese insurance companies
  2. Financial institutions that are registered in a Relevant Jurisdiction and with a principal place of business in a Relevant Jurisdiction
The RQFII eligible jurisdictions are currently Hong Kong, Singapore, the United Kingdom, France, Korea, Germany, Australia, Switzerland, Canada, the United States, and Luxembourg.

RQFII vs QFII

RQFIIQFII
RegulatorCSRC, SAFECSRC, SAFE
Criteria of ApplicantsCommercial Banks
  • In operation for more than 10 years
  • Securities AUM no less than USD 5 billion
  • Tier 1 Capital no less than USD 300 million
Securities Companies
  • In operation for more than 5 years
  • Securities AUM no less than USD 5 billion
  • Capital no less than USD 500 million
AMC, insurance companies and other institutions
  • Business experience of more than 2 years
  • Securities AUM no less than USD 500 million
A financial institution that
  • Has a healthy financial condition, a good credit standing,
    • and its domicile and business qualification meet the requirements of the CSRC
    who meet the relevant professional qualification requirements of the residential
    country or region
    • Operates its business in a compliant manner and has not been subject to serious
    penalties that are meted out by any regulators of its domicile in the last three
    years or since its inception; and
    • Other requirements stipulated by the CSRC in accordance with the principle of
    prudential regulation
    Lock-up Period for Open-ended Fund-3 months
    Fund Repatriation100% principal after lock-up period20% of principal net worth at the end of past year every month

    Top 20 RQFII Quota Holders

    Name of InstitutionPlace of domicileQualification approval dateApproved Quota
    CSOP Asset Management LtdHong Kong9/22/2014$6,891
    Vanguard Investment Australia LtdAustralia1/27/2016$4,484
    E Fund Management Co., LimitedHong Kong5/30/2014$4,066
    China Asset Management LimitedHong Kong7/26/2013$3,259
    BlackRock LimitedSingapore5/30/2016$2,990
    Harvest Global Investment LimitedHong Kong9/22/2014$2,203
    Haitong International Holdings LimitedHong Kong8/26/2014$1,599
    Bosera Asset Management Co., LtdHong Kong8/26/2014$1,435
    Shinhan BNP Paribas Asset Management Co.,LtdKorea4/28/2015$1,196
    Taikang Asset Management Company LimitedHong Kong8/26/2014$1,106
    Guoyuan Securities Hong Kong8/26/2014$1,091
    Guotai Junan Financial HoldingsHong Kong5/30/2014$1,031
    China Life Franklin Asset Management Co.,LtdHong Kong8/26/2014$972
    Carmignac GestionFrance6/29/2015$897
    Lyxor Asset ManagementFrance5/29/2015$897
    Deutsche Asset & Wealth ManagementGermany3/26/2015$897
    ABCI Asset Management LimitedHong Kong7/30/2014$792
    GIC Private LimitedSingapore4/28/2015$747
    Swiss Reinsurance Company LtdSwitzerland7/29/2015$747
    Generali Investments Luxembourg S.A.Luxembourg4/28/2016$747