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O&A on the cancellation of the limits on asset allocation of QFII and RQFII
09-10-2016

1. Q: Recently, it was reported that the regulators lifted the limit on asset allocation of QFII and RQFII. What is the CSRC's comment on this matter?
A: The QFII and RQFII schemes were introduced in 2002 and 2011, respectively, to further open up the Chinese capital market. The two schemes are operating steadily and playing constructive roles in bringing in long-term foreign capital, optimizing investor structure, guiding value investment, improving corporate governance, and promoting reform and open-up for sound development of the capital market. By the end of August 2016, a total of 300 foreign institutions were approved as QFII for an investment quota of USD 81.5 billion; a total of 210 foreign institutions were approved as RQFII for an investment quota of CNY 510.3 billion.

During the early stages of implementation and after the global financial crises, the CSRC window guided the asset allocation of QFII and RQFII through the depositary banks. For instance, equity investment of QFII should be no less than 50% and cash should be no more than 20% for both QFII and RQFII. In recent years, as the capital market further opens up, foreign institutions now have multiple channels to enter the Chinese market. QFII and RQFII expected for more flexibility in asset allocation. To provide convenience for investment operations and to bring in more long-term foreign capital, the CSRC, in principle, will lift the limits previously imposed on the asset allocation of QFII and RQFII, who will then have full discretion on this matter. Meanwhile, the CSRC will enhance on-going supervision on all investment activities of QFII and RQFII. The CSRC has informed the depositary banks for QFII and RQFII on this adjustment in regulatory policy.



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