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China to further open A-shares market to foreign investors, CSRC solicits public comments on the amendments to A-shares securities accounts administrative rules
09-07-2018


To fully implement the directives of the 19th National Congress of the Communist Party of China (CPC), and to follow the strategy and deployment by the CPC Central Committee and the State Council on revitalizing China through the development of human resources, and further opening up the capital markets, the China Securities Regulatory Commission (CSRC), together with relevant competent authorities, have submitted the Proposal to Further Ease Policies for Foreign Investors to Open A-shares Securities Accounts, and have obtained a tentative approval from the State Council. Starting from July 8, 2018, the CSRC is seeking public comments on the drafted revisions to the rules including Measures for the Administration of Securities Depository and Clearing and Measures for the Administration of Equity Incentives of Listed Companies.

In accordance with the principle of implementing opening up policies in a prudent and orderly manner, the proposed amendments will allow two more groups of foreigners to open onshore A-shares securities accounts: 1) foreign individuals working in the Chinese mainland, and 2) foreign employees of A-share listed companies who work overseas while participating in equity incentive plans offered by their employers.

The CSRC plans to amend the current rules in several areas. First, to revise relevant provisions in the Measures for the Administration of Securities Depository and Clearing by adding "eligible foreigners" as a new investor category after Chinese citizens, Chinese legal persons, and Chinese partnership enterprises. The specific procedures for foreign individuals applying to opening securities accounts will be drafted by China Securities Depository and Clearing Corporation Limited (CSDC), subject to the CSRC's approval.

Second, to revise the Measures for the Administration of Equity Incentives of Listed Companies by expanding the elligible participants to equity incentive plans of listed companies to cover not only foreign employees working in the Chinese mainland, but also those working overseas, by allowing them to participate in equity incentives plans and open A-shares securities accounts pursuant to the new measures.

With far-reaching and fundamental impact on institutional arrangement, the proposed revisions to the rules of A-shares securities accounts administration are put forward under the current legal framework with balanced considerations of meeting actual needs of capital markets development and drawing on experiences both abroad and at home. These measures are believed to diversify investor base, expand market access, improve market structure, and promote foreign access to the A-share market.

Going forward, the CSRC will take due consideration of the comments received and release the amended rules according to rule-making procedures. Supportive measures in such areas as taxation and foreign exchange management will also be released by competent regulatory agencies as part of this opening-up effort.

It is important to note that the new measure is applicable to foreign individual investors from countries or regions whose securities regulators have established regulatory cooperation agreements with the CSRC. Foreign individual investors opening A-shares securities accounts shall abide by the laws and regulations in China governing the securities market, including rules on trading, clearing and settlement, securities registration and fund custody.

 

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