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    State Administration of Foreign Exchange
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    Regulate Foreign Exchange Administration of Cross-border Securities Investment, Steadily Promote Implementation of the Qualified Institutional Investor (QII) System
Regulate Foreign Exchange Administration of Cross-border Securities Investment, Steadily Promote Implementation of the Qualified Institutional Investor (QII) System

Press Release of the SAFE   October 10, 2009
For the purpose of further improving foreign exchange administration of cross-border securities investment, steadily promoting implementation of the qualified institutional investor (QII) system, facilitating the regulated opening-up of Chinas capital market, and guiding funds in an orderly two-way flow, the State Administration of Foreign Exchanges (SAFE) currently is promulgating the Regulations for Foreign Exchange Administration of Domestic Securities Investments by Qualified Foreign Institutional Investors (QFII) (hereinafter referred to as the Regulations) and the Circular of the State Administration of Foreign Exchange (SAFE) on Relevant Issues Concerning Foreign Exchange Administration of Overseas Securities Investments by Fund Management Companies and Securities Companies (hereinafter referred to as the Circular).
Based on a summary of previous supervisory experience, the Regulations and the Circular revise and regulate the system of foreign exchange administration of QIIs, and specify the relevant regulatory requirements. First, they further simplify the relevant operations in light of investment facilitation, including simplifying the investment quota application procedures and required materials, facilitating the opening of the relevant accounts, and managing the remittance/exchange of funds, and so forth. Second, they encourage foreign institutional investors to make medium- and long-term securities investments in China. The Regulations adjust the limit on the investment quota for a single qualified foreign institutional investor (QFII) from USD 800 million to USD 1 billion, and reduce to 3 months the principal lock-up period for pension funds, insurance funds, Chinas open-ended funds, and so forth for medium- and long-term investments. Third, in order to guarantee consistency between institutions that are awarded an investment quota and the actual user of the quota, they specifically stipulate that QIIs shall not in any form transfer or resell their investment quotas. Fourth, for the purpose of avoiding the risks of cross-border securities investments and promoting the regulated opening-up of the capital market, they further enhance the relevant requirements for statistical monitoring and post-event supervision, as well as the reporting and filing responsibilities of the respective QIIs and their custodians.
Meanwhile, in order to further improve the transparency of administrative licensing, the SAFE also issued a statement on the approvals of QII investment quotas up to the end of September, 2009, and in the future it will issue such quarterly statements on the SAFE government Web site. (End.)

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