Measures for Pilot Domestic Securities Investment Made by RMB
Qualified Foreign Institutional Investors of Fund Management
Companies and Securities Companies
Article 1 To regulate the use of RMB funds raised in Hong Kong by RMB qualified foreign
institutional investors (“QFII”) of fund management companies and securities companies
to carry out the pilot domestic securities investment business, promote the sustainable,
healthy and stable development of the securities market and protect the lawful rights and
interests of investors, these Measures are formulated in accordance with the relevant
laws and administrative regulations.
Article 2 These Measures shall apply to the use of RMB funds raised in Hong Kong by the
subsidiaries of domestic fund management companies and securities companies in Hong
Kong (hereinafter referred to as “Hong Kong subsidiaries”) to invest in the domestic
securities market.
Article 3 To invest in the domestic securities market, a Hong Kong subsidiary must obtain
the approval of the China Securities Regulatory Commission (hereinafter referred to as
the “CSRC”) and obtain the investment quota approved by the State Administration of
Foreign Exchange (hereinafter referred to as the “SAFE”).
Article 4 The CSRC shall, in accordance with law, supervise and administer the domestic
securities investment made by Hong Kong subsidiaries, the People’s Bank of China
(hereinafter referred to as the “PBC”) shall, in accordance with law, administer the RMB
bank accounts opened within China by Hong Kong subsidiaries, the SAFE shall
administer the investment quota of Hong Kong subsidiaries in accordance with law, and
the PBC shall, in accordance with law, monitor and administer the inward and outward
remittance of capital jointly with the SAFE.
Article 5 To carry out the pilot domestic securities investment business, a Hong Kong
subsidiary shall entrust a domestic commercial bank with the qualification of a QFII
custodian to be responsible for its asset custody business, and entrust a domestic
securities company to buy or sell securities on its behalf.
A Hong Kong subsidiary may entrust a domestic fund management company or a
securities company to manage its domestic securities investment.
Article 6 To apply to carry out the pilot domestic securities investment business with the
RMB funds raised in Hong Kong, a Hong Kong subsidiary shall satisfy the following
conditions:
1. has obtained the qualification for engaging in the asset management business from the
Hong Kong securities regulatory department and has carried out the asset management
business, and has a sound financial status and good credit standing;
2. has sound corporate governance and effective internal controls, and its employees
meet the relevant requirements for the qualification of practice in Hong Kong;
3. the applicant and its domestic parent company have sound business operations, and
have not been heavily punished by the local regulatory department in the previous three
years;
4. the applicant’s domestic parent company is qualified for engaging in the securities
asset management business; and
5. other conditions as required by the CSRC under the principle of prudent supervision.
Article 7 To apply to carry out the pilot domestic securities investment business with the
RMB funds raised in Hong Kong, a Hong Kong subsidiary shall submit the following
materials:
1. an application report, including the reason for the application, the basic information of
the applicant, the domestic securities investment plan, and commitments on the
authenticity, accuracy, completeness and regulatory compliance of the application
materials;
2. a photocopy of the institution’s registration certificate;
3. a photocopy of the asset management business license verified and issued by the
Hong Kong securities regulatory department;
4. an explanation on whether the applicant and its domestic parent company have been
punished by the local regulatory department in the previous three years;
5. a certificate proving that the key personnel of the applicant satisfy the relevant
requirements for the qualification of practice in Hong Kong;
6. a statement on fund sources and the domestic securities investment plan;
7. a statement on the internal control rules of the applicant’s company;
8. audited financial reports of the previous accounting year;
9. a draft of the custody agreement signed with the domestic custodian;
10. legal opinions; and
11. other documents required by the CSRC.
Article 8 The CSRC shall examine the Hong Kong subsidiary’s qualification for engaging
in the domestic securities investment business, and make a decision of approval or
disapproval within 60 days after receiving the complete application documents. In the
case of approval, it shall provide a written reply and issue the securities investment
business license; and in the case of disapproval, it shall notify the applicant in writing.
Article 9 A Hong Kong subsidiary that has obtained the qualification for engaging in the
domestic securities investment business shall apply to the SAFE for the investment quota
on the basis of the following materials:
1. an application report, including the basic information of the applicant and its domestic
parent company, a statement on fund sources, and the domestic securities investment
plan;
2. a photocopy of the securities investment business license issued by the CSRC;
3. a notarized power of attorney to the custodian; and
4. other materials as required by the SAFE.
The SAFE shall make a decision of approval or disapproval within 60 days after receiving
the complete application documents of the Hong Kong subsidiary. In the case of approval,
it shall provide a written reply and issue the registration certificate; and in the case of
disapproval, it shall notify the applicant in writing.
Article 10 Where a Hong Kong subsidiary carries out the pilot domestic securities
investment business, its domestic custodian shall:
1. maintain all the assets entrusted by the Hong Kong subsidiary;
2. supervise the operation of domestic securities investment made by the Hong Kong
subsidiary;
3. handle the relevant businesses such as the inward and outward capital remittance of
the Hong Kong subsidiary;
4. report balance of payments statistics as required;
5. submit the relevant business reports and statements to the CSRC, the PBC and the
SAFE; and
6. perform other functions prescribed by the CSRC, the PBC or the SAFE under the
principle of prudent supervision.
Article 11 Where a Hong Kong subsidiary invests in RMB financial instruments within the
approved investment quota, it shall abide by the relevant regulatory requirements, and the
investment types and proportions shall be determined by the CSRC and the PBC.
The Hong Kong subsidiary shall invest in the inter-bank bond market in accordance with
the relevant provisions of the PBC.
Article 12 To carry out the pilot domestic securities investment business, a Hong Kong
subsidiary shall abide by the provisions of China’s laws and regulations on shareholding
proportions and information disclosure and the requirements of other relevant regulatory
rules.
The Hong Kong subsidiary shall, as required by the PBC, enter the information on the
inward and outward remittance of RMB funds into the Cross-border RMB Receipt and
Payment Information Management System of the PBC through the custodian bank.
Article 13 A Hong Kong subsidiary shall handle the inward and outward remittance of
capital in accordance with the relevant requirements for the management of investment
quotas.
The Hong Kong subsidiary may remit the principal and investment proceeds abroad by
using RMB or by purchasing foreign exchange.
Article 14 The CSRC, the PBC and the SAFE may require Hong Kong subsidiaries,
domestic custodians, securities companies and other institutions to provide relevant
materials on the Hong Kong subsidiary companies in accordance with law, and make
necessary inquiries and inspections.
Article 15 Where a Hong Kong subsidiary falls under any of the following circumstances, it
shall report to the CSRC, the PBC and the SAFE within five working days:
1. modification of the domestic custodian;
2. modification of the person in charge of the institution;
3. adjustment of the equity structure;
4. adjustment of the registered capital;
5. merger with any other institution;
6. involvement in any major lawsuit or any other major event;
7. imposition of any heavy punishment overseas; or
8. any other circumstance as prescribed by the CSRC, the PBC or the SAFE.
Article 16 Where a Hong Kong subsidiary falls under any of the following circumstances, it
shall re-apply for the securities investment business license:
1. modification of the institution name;
2. merger by any other institution; or
3. any other circumstance as determined by the CSRC or the SAFE.
During the period of re-application for the securities investment business license, the
Hong Kong subsidiary may continue its securities investment, except for investment
whose suspension is deemed necessary by the CSRC under the principle of prudent
supervision.
Article 17 Where a Hong Kong subsidiary falls under any of the following circumstances, it
shall surrender its securities investment business license and registration certificate to the
respective issuing organ:
1. the applicant fails to apply to the SAFE for an investment quota within one year after
obtaining the securities investment business license;
2. the institution is dissolved or bankrupt or has been taken over; or
3. any other circumstance as determined by the CSRC, the PBC or the SAFE.
Article 18 Where a Hong Kong subsidiary or its domestic custodian violates any law or
regulation during the pilot implementation of the domestic securities investment business,
the CSRC, the PBC and the SAFE may take the corresponding regulatory measures and
impose administrative punishments in accordance with law.
Article 19 These Measures shall come into force on the date of issuance.