|Rules Eased On Use of Offshore Yuan to Invest In Mainland Markets|
Beijing has relaxed rules on how asset managers can use their quotas for investing in its domestic capital markets, according to a circular from the state market regulator. The changes should accelerate repatriation of offshore yuan funds to the mainland under the renminbi qualified foreign institutional investor scheme and improve the efficiency of RQFII quota usage.
The scheme, launched in 2011, allows financial institutions to use offshore yuan to invest in the mainland's securities markets, including in stocks, bonds and a range of money market instruments. However, in the past they have had to apply for quotas for each of their products under the RQFII programme. If a quota was not used up for a product, it either got wasted in that year or the institution needed to seek approval to use it for other products.
A document from the State Administration of Foreign Exchange (SAFE) dated May 30 said quotas would no longer be imposed on a specific open-ended mutual fund, but could be transferred among such funds within an institution.
Transfers between open-ended funds and other products or funds would still need SAFE approval.
The RQFII scheme is part of the mainland's move to liberalise its capital markets, improving two-way movement of investment funds and allowing the yuan to trade more freely against other currencies. Beijing has granted 270 billion yuan (HK$339 billion) in quotas to Hong Kong, 50 billion yuan to Singapore, 80 billion yuan to London and 80 billion yuan to Paris. At the end of last month, quotas totalling 238.2 billion yuan had been assigned to fund managers in Hong Kong, the leading centre for the trade.
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Published on our website on June 26, 2014