HONG KONG, June 6 China has relaxed rules on how
asset managers can utilise their quotas for investing in its
domestic capital markets, according to a circular from the state
market regulator seen by Reuters.
The changes should accelerate repatriation of offshore yuan
funds to China under the Renminbi Qualified Foreign
Institutional Investor (RQFII) programme and improve the
efficiency of RQFII quota usage.
The programme, launched in 2011, allows financial
institutions to use offshore yuan to invest in the mainland's
securities markets, including in stocks, bonds and money market
However, these institutions have to apply for quotas for
each of their RQFII products. If a quota is not used up for a
product, it either gets wasted in that year or the institution
needs to seek approval to use it for other products.
A document from the State Administration of Foreign Exchange
(SAFE) that was dated on May 30 and seen by Reuters on Friday
made it clear that quotas would no longer be imposed on a
specific open-ended mutual fund, but could be transferred among
these funds within an institution.
Transfers between open-ended funds and other products or
funds still need approvals from SAFE.
Efforts to get comment from SAFE weren't successful.
"The new rule makes it more flexible for us to manage
quotas," said a fund manager at a Chinese fund firm in Hong
The RQFII programme is part of China's move to liberalise
its capital markets, improving two-way movement of investment
funds and allowing the yuan to trade more freely against other
Beijing has granted 270 billion yuan ($43.17 billion) in
quotas to Hong Kong, 50 billion yuan to Singapore, 80 billion
yuan to London and 80 billion yuan to Paris. At the end of May,
quotas totalling 238.2 billion yuan had been assigned to fund
managers in Hong Kong.
($1 = 6.2548 Chinese Yuan Renminbi)
(Reporting by Michelle Chen and Zhao Hongmei; Editing by