On December 16th, 2012, China Securities Regulatory Commission, People's Bank of China, and the State Administration of Foreign Exchange have jointly published the Measures for the Pilot Program of Domestic Securities Investment Made by RMB Qualified Foreign Institutional Investors of Fund Management Companies and Securities Companies, allowing the subsidiaries（in Hong Kong）of qualified fund management companies and securities companies to be the pilot institutions. They can invest their RMB capitals raised in Hong Kong into domestic securities within the approved RMB investment quota.

 

Ever since its promulgation, the Measures for the Pilot Program of Domestic Securities Investment Made by RMB Qualified Foreign Institutional Investors of Fund Management Companies and Securities Companies has been proactively promoted by relevant authorities, making the pilot program a smooth process. Up to now, the CSRC has granted the RMB Qualified Foreign Institutional Investor (hereinafter referred to as RQFII) qualification to 21 pilot institutions. The State Administration of Foreign Exchange has approved 20 billion yuan as the total quota. The RQFII products of these pilot institutions have been approved by Hong Kong Securities and Futures Commission, some of which have been invested into the domestic securities market and interbank market. The pilot program of RQFII is conducive for us to further open up the capital market, improve the return mechanism of RMB, better promote the internationalization of RMB and to consolidate the position of Hong Kong as an international financial center. Since it has been launched, the pilot program has received positive feedback from the market.

 

The CSRC, the People's Bank of China, and the State Administration of Foreign Exchange have carefully studied the possibility of enlarging the scope of this pilot program, and conducted close communication with relevant authorities in Hong Kong. To further open up the domestic securities market, enlarge the channel of RMB investment so as to satisfy the demand of foreign investors to invest in the domestic securities market, with the permission from the state council, the CSRC, the People's Bank of China, and the State Administration of Foreign Exchange have decided to add 50 billion yuan into the quota of RQFII investment, allowing the pilot institutions to use it in issuing RMB A-share ETF product, to invest in the A-share index shares and list them in HKEX. As for the next stage, the CSRC will continue to research with concerning authorities to enlarge the scale of pilot program, scope of institutions and ratio of investment.