The branches and foreign exchange administrative departments of the State Administration of Foreign Exchange (SAFE) in all provinces, autonomous regions, and municipalities directly under the Central Government; SAFE branches in Shenzhen, Dalian, Qingdao, Xiamen, and Ningbo:

For the purpose of regulating foreign exchange administration of overseas securities investments by domestic fund management companies and securities companies (hereinafter referred to as Securities Trading Institutions) and pursuant to the Regulations of the People's Republic of China on Foreign Exchange Administration and the relevant regulations, the relevant issues are hereby notified as follows:

1. The State Administration of Foreign Exchange, with all its branches (hereinafter referred to as AFEs), shall be responsible for the supervision, administration, and inspection of the overseas securities investment quota (hereinafter referred to as Investment Quota), foreign exchange accounts, and exchange by/of the Securities Trading Institutions.

2. Securities Trading Institutions qualifying for foreign exchange business when operating overseas securities investment business shall apply to the SAFE for an Investment Quota.

3. The following materials shall be submitted to the SAFE when Securities Trading Institutions apply for an Investment Quota:
1) A written application, including basic information about the applicant, the overseas securities investment plan, the Investment Quota for which the application is being submitted, information about the senior executives for the overseas securities investments, the internal control system, the risk management measures, and the relevant preparations, and the Basic Information on Overseas Securities Investments by Domestic Institutions(Attachment One).
2) Qualification approvals for domestic institutional investors issued by the China Securities Regulatory Commission (hereinafter referred to as CSRC).
3) Other materials as required by the SAFE

Those who apply to increase the Investment Quota shall submit the materials prescribed thereof, as well as a report on the use of the approved Investment Quota.

4. The SAFE implements balanced management of the Investment Quota. The net outward remittances for overseas securities investments by Securities Trading Institutions shall never exceed the approved Investment Quota.

Securities Trading Institutions may, as investment requires, within the range of its Investment Quota invest in relevant overseas securities investment products approved by the CSRC (hereinafter referred to as Products).

Should a Securities Trading Institution fail to use its Investment Quota effectively within two years after approval, the SAFE shall have the right to reduce the quota.

A Securities Trading Institution shall not transfer or assign its Investment Quota in any form to any other institution.

5. Securities Trading Institutions may collect from domestic investors foreign exchange funds for overseas securities investments, as well as RMB funds to purchase foreign exchange for overseas securities investments.

Domestic investors shall not invest in relevant Products issued by the Securities Trading Institutions in the form of foreign currency banknotes.

6. A domestic custodian shall open a domestic escrow account for the relevant Products of a Securities Trading Institution with the approval for the Investment Quota issued by the SAFE, among which a domestic foreign exchange escrow account shall be opened for Products collected in the form of foreign exchange, and a domestic RMB escrow account and a domestic foreign exchange escrow account shall be opened for Products collected in the form of RMB.

A domestic custodian shall open a domestic escrow account for each Product respectively. Foreign exchange escrow accounts in different currencies for one Product shall be deemed to be one account.

A domestic custodian shall provide and file, within 5 working days after the opening of a domestic foreign exchange escrow account, the account opening information and the trust agreement to the AFE in the place where the custodian is located..

A domestic custodian shall, at the place where the overseas custodian is located, open an overseas escrow account for the relevant Products issued by the Securities Trading Institutions

See Attachment Two for the division of revenue and expenditures of domestic foreign exchange escrow accounts and overseas escrow accounts.

7. When raising foreign exchange funds from domestic investors for overseas securities investments, Securities Trading Institutions shall, in compliance with the relevant regulations, open special foreign exchange accounts with raised funds and foreign exchange clearing accounts for the Products.

If Securities Trading Institutions need to raise foreign exchange funds from domestic investors in the form of direct sales and proxy sales, foreign exchange accounts for the direct sales and proxy sales of the Products shall also be opened.

All the accounts hereof shall be opened by the Securities Trading Institutions based on the approved Investment Quota issued by the SAFE and in compliance with the relevant regulations. See Attachment Two for the divisions of the revenue and expenditures in all the accounts hereof.

8. If domestic investors invest with their own foreign exchange, after the inward remittance of the principal and proceeds, they shall not directly withdraw the cash or proceeds for exchange settlement, but they shall transfer it from the domestic foreign exchange escrow accounts, via the foreign exchange clearing accounts and the direct sales and proxy sales foreign exchange accounts, to the foreign exchange accounts of the domestic individual investors or to the previous foreign exchange accounts of the domestic institutional investors.

If domestic investors invest with RMB funds, after the inward remittance of the principal and the proceeds, the payments shall be made after the exchange settlement by the Securities Trading Institutions on their behalf via the domestic foreign exchange escrow accounts with the approved Investment Quota issued by the SAFE.

9. Securities Trading Institutions shall, within 7 working days after the establishment of each Product, provide information about the Product, such as the amount of funds actually raised and the fund sources, to the SAFE. (See Attachment 3 for the format.)

Securities Trading Institutions shall, within 7 working days after the end of every month, provide to the SAFE the relevant tabulated data on its overseas securities investments. (See Attachment 4 for the format.)

Domestic custodians shall, within 7 working days after the end of every month, provide to the SAFE the relevant data regarding the overseas securities investments of entrusted Securities Trading Institutions.  (See Attachment 5 and 6 for the format.)

10. Securities Trading Institutions and domestic custodians shall perform their obligations to report the balance of payments in compliance with the relevant regulations for reporting the balance of payments

11. Should Securities Trading Institutions or domestic custodians fail to honor and observe this circular, they shall be punished by the corresponding AFEs in compliance with the Regulations of the People's Republic of China on Foreign Exchange Administration and the relevant regulations on foreign exchange administration. In serious cases involving the domestic custodians, the AFEs may order a replacement of the domestic custodian of the Securities Trading Institution. In serious cases involving the Securities Trading Institutions, the AFEs may revoke their Investment Quotas.

12. The present Circular shall be implemented as of the date of promulgation. The Circular of the SAFE on Relevant Issues Concerning Foreign Exchange Management of Overseas Securities Investments by Fund Management Companies (Huifa No. 46 [2006]) shall be repealed.

Upon receipt of this Circular, all SAFE branches and foreign exchange administrative departments shall transmit it in a timely manner to the fund management companies, securities companies, and designated foreign exchange banks under their respective administrations.

Attachments: (omitted)
1. Basic Information on Overseas Securities Investments by Domestic Institutions.
2. Division of Revenue and Expenditures in Relevant Accounts of Overseas Securities menvestments by Fund Management Companies and Securities Companies.
3. Record for Raising Overseas Securities Investment Products by Securities Trading Institutions.
4. Monthly Report on the Use of the Overseas Securities Investment Quota by Qualified Domestic Institutional Investors.
5. Monthly Report on Overseas Securities Investments by Qualified Domestic Institutional Investors.
6. Details on Outward and Inward Remittances of Overseas Securities Investment Funds by Qualified Domestic Institutional Investors.

September 29, 2009