On May 7, 2020, the People's Bank of China and the State Administration of Foreign Exchange issued

the Regulations on Funds of Domestic Securities and Futures Investment by Foreign Institutional Investors (PBOC & SAFE Announcement [2020] No. 2, hereinafter referred to as the Regulations), which defined and simplified the requirements for the administration of funds of domestic securities and futures investment by foreign institutional investors to further facilitate the participation of foreign investors in China's financial market.

The content of the Regulations consists primarily of the following:

I. Put an end to the quota-based management requirements for domestic securities investment from qualified foreign institutional investors and RMB qualified foreign institutional investors (hereinafter referred to as qualified investors), and implement registration management for cross-border fund remittance and exchange by qualified investors.

II. Clarify that qualified investors are to open one or more "special account(s) for qualified investors" with the custodian according to investment and capital remittance demands on the basis of the business registration certificate issued by the State Administration of Foreign Exchange.

III. Implement integrated management of local and foreign currencies and allow qualified investors to independently choose the currency and timing of the remittance of funds.

IV. Significantly simplify the procedures for remitting income from domestic securities investment by qualified investors, replace materials such as special audit reports on investment income and tax filing forms issued by China-certified public accountants and tax filling forms with a tax payment commitment letter.

V. Lift the limit on the number of custodians, allow a single qualified investor to choose multiple domestic custodians, and appoint one custodian as the main custodian..

VI. Improve the regulatory requirements for management of foreign exchange risks and investment risks of domestic securities investment by qualified investors.

VII. Strengthen in-process and ex-post supervision by the People's Bank of China and the State Administration of Foreign Exchange.

The Regulations shall apply to qualified foreign institutional investors and RMB qualified foreign institutional investors approved by the China Securities Regulatory Commission to invest in domestic securities and futures markets.

The Regulations have been in effect since June 6, 2020.

(All information in this document is authentic in Chinese. English is provided for reference only. In case of any discrepancy, the Chinese version shall prevail.)

(Source: The People's Bank of China)