In order to further standardize foreign exchange administration for overseas portfolio investments by domestic institutions and to promote the facilitation of overseas portfolio investments, the State Administration of Foreign Exchange (SAFE) recently promulgated the Regulations on Foreign Exchange Administration for Overseas Portfolio Investments by Qualified Domestic Institutional Investors (Announcement No. 1 of the SAFE in 2013, hereinafter referred to as the “Regulations”). The Regulations cancel or streamline the relevant procedures for foreign exchange administration, and merge and integrate the foreign exchange administration policies for qualified domestic institutional investors (QDIIs).

The main aspects of the Regulations include: (1) removal of the currency restrictions on fund remittances, and diversifying the fund sources of overseas portfolio investments by domestic institutions; (2) lifting the verifications for foreign exchange settlements and purchases, and simplifying the materials to apply for quotas; (3) unifying the requirements for quota management, i.e., implementing balanced management of overseas portfolio investments for various kinds of qualified institutions, that is, the net amount of remittances of the overseas portfolio investments shall not exceed the approved investment quota; (4) strengthening statistics and monitoring, intensifying efforts for statistical and ex-post monitoring of the inflow and outflow of cross-border funds under portfolio investments by making full use of IT approaches, with the aim of preventing the risks of cross-border fund flows.

Implementation of the Regulations will play an active role in promoting the facilitation of overseas portfolio investments by qualified domestic institutions and will better meet the investment needs of domestic institutions and individuals for overseas portfolio investments.