May 16, 2012, the 37th International Organization of Securities Commissions will be opened in Beijing. Sidelines of the conference, the State Administration of Foreign Capital Project Management Division Sun Lujun, reporters interviewed the Chief Secretary to the QFII related problem.
Q: This year the implementation of the tenth anniversary of China’s QFII system, How do you evaluate the practice of the QFII system over the past decade?
Answer: China’s QFII system in late 2002, has nearly 10 years. The QFII system is not yet fully open to the RMB capital account convertibility of the institutional arrangements in the case of the domestic capital market in China. By this arrangement, which allows eligible qualified foreign institutional investors to enter China’s domestic capital market in the approved investment quota, securities investment.
Practice has proved that in the past 10 years, the implementation of the QFII system is to promote an important step in the process of China’s capital market liberalization and RMB convertibility under capital account. To allow qualified foreign institutional investors eligible to participate in China’s domestic stock market through the QFII system, the institutional framework to improve and refine China’s capital market, investment philosophy, corporate governance, risk control, technical level, and enhance the domestic custodian bank, brokerage services were to play an active role to promote the extensive cooperation of domestic and foreign financial institutions, to promote the standardization of China’s capital market, international development, and accumulated useful experience for the further reform of China’s capital market development.
Q 2: The view from the division of regulatory responsibilities of the QFII system, the QFII qualification examination and market access for approval by the SFC is responsible for investment in domestic securities markets in the QFII quota approval from the foreign exchange bureau. So, tell us about the foreign exchange bureau QFII quota approval system?
Answer: to obtain securities investment business license according to relevant laws and regulations of the QFII system, QFII institutions approved by the Commission, shall, within one year by the trustee to the foreign exchange bureau asked the amount of investment applications. Foreign exchange bureau on QFII investment quota for approval to the implementation of collective assessment mechanism responsible comrades from the different business units of the foreign exchange bureau the amount of the Vetting Committee meets once a month will be assessed, in principle, have been complete compliance to submit the amount of the application materials of QFII institutions concentrated reviewed. This mechanism to enhance the transparency of the amount of examination and approval of the QFII institutions, fairness, normative and timely play a positive role. In addition, the audit process, we are always with the SFC, the relevant departments to maintain close communication and coordination, the establishment of good information and data sharing mechanism.
Q: Please tell us about the QFII quota approval in recent years?
A: Since the implementation of the QFII system, the foreign exchange bureau actively cooperate with the Securities and Futures Commission, the goal of supporting and promoting the development of China’s capital market reforms, combined with the actual situation of China’s international balance of payments situation and the development of the securities market, a reasonable grasp of the rhythm of the amount of approval promote the QFII investment is expanding. As of May 16, 2012, the foreign exchange bureau approved 138 QFII institutions a total of $ 26,013,000,000 the amount of investment (excluding because of the investment subject to change and other reasons, to cancel the three institutions and their original approved amount of the investment amount).
Overall, the approval of the QFII quota progress with the objective needs of the QFII institutions is basically matching. For example, in the QFII system, the initial implementation of the 2008 international financial crisis period, the institutions the QFII investment quota of Interest is weak, also a smaller amount corresponding to the annual approval of the QFII investment quota; during the steady progress of the QFII system, foreign exchange bureau to maintain an annual 30-35 billion dollars approval rhythm. Should be noted that in 2011 facing continued pressure on the large cross-border capital flows, foreign exchange bureau appropriate slowdown in QFII quota approval progress throughout the year approved a total of $ 1.92 billion. Since 2012, the overall international balance of payments situation in China tend to be more balanced, to further promote the reform and development of domestic capital markets, foreign exchange bureau promptly adjust and accelerate the QFII quota approval progress has approved 38 QFII institutions, as of May 16, a total of 43.73 the amount of one hundred million U.S. dollars, was close to the sum of the amount of investment approved in 2010 and 2011, two years.
Q: We note that the latest data show that the SFC, as at the end of April 2012 has been 163 foreign institutions granted QFII status, but the foreign exchange bureau recently released data show that, as of 8 May 2012 cumulative approved only 141 of the amount of QFII institutions. Will the two data differences should be how to explain?
Answer: SFC statistics and announced a QFII approved data, Exchange Bureau of Statistics and published by the QFII quota approved data, the above difference is mainly caused by the following three reasons: First, part of the QFII institutions do not submitted to the investment quota application materials to the foreign exchange bureau in a timely manner; is part of the QFII institutions application materials are incomplete or has changed, mainly for fund-raising or investment plan to adjust to consider, need to make changes to the material already submitted; QFII institutions due to fundraising difficulties and other reasons, take the initiative to request an extension to the approval of its investment quota.
exclusion of the foregoing, the current QFII quota of foreign exchange bureau for approval progress and the progress of the approval of the CSRC a QFII consistent.
Q5: Recently, a number of occasions, the SFC will take measures to vigorously promote the further development of the QFII system, including the possibility to reduce the QFII access threshold, the further introduction of overseas long-term funding and other measures. To ask whether the foreign exchange bureau also take this into consideration?
A: The process of the formation and implementation of the QFII system, the Administration of Foreign Exchange and the SFC has always maintained close communication and cooperation, the two departments has been formed to exchange information, data sharing mechanism. Exchange Board adopted the revision of relevant policies and regulations, to establish the mechanism of the amount will be assessed, window guidance and other means, continue to promote the QFII system involved in the facilitation of foreign exchange management, standardization and transparency, QFII institutions and rational policy needs to respond positively to and adjustments. Amount of approval and exchange policy, the Administration of Foreign Exchange and the SFC has also been implementing to encourage foreign pension funds, insurance funds, endowment funds, such as the principles of the medium-and long-term investors, the amount approved in a single institution, lock-up period of the principal amount invested were given a larger preferential policies.
Q: Recently, the QFII total degree has been approved by the State Council increased to 800 billion U.S. dollars. Will the foreign exchange bureau for approval to add the amount of any plan?
A: Recently, the State Council has approved QFII investment total degree up to $ 80 billion. To support the reform and development of the domestic stock market, foreign exchange bureau in the amount of investment and foreign exchange management, positive adjustment, such as: significantly speed up the approval of the QFII investment quota rhythm, government-backed investment funds, and foreign pension funds, insurance The fast-track funds and other medium-and long-term funding amount for approval to give a degree of tilt, on the scale of the initial investment amount above QFII institutions initial approved amount and appropriate to simplify the management processes of the foreign exchange accounts and Renminbi accounts of the QFII institutions.
Next, the Exchange will continue to vigorously support the reform and development of the domestic capital market, continue to maintain close communication and coordination with the SFC, with cross-border capital flow into the situation, adhere to encourage a policy of long-term overseas investment funds. QFII quota approval mechanism to further improve the QFII quota audit efficiency, better and faster to meet the needs of QFII institutions the amount of investment in domestic securities markets, and promote the development of the QFII system and the reform of China’s capital market.
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