China Further Opens Domestic Markets to Foreign Investors

On 30 October, 2020, China Financial Futures Exchange issued a notice, aiming at implementing relevant management measures and regulations and doing a good job in linking up relevant policies. To ensure the orderly connection of qualified foreign investors' participation in equity index futures trading, the notice further clarifies the types and trading methods of financial futures that qualified foreign investors can participate in trading.

China launched the RQFII program in 2011, allowing foreign institutional investors to trade in the country's stock and bond markets under certain quotas. The quotas were removed in May, and in September regulators announced a single 'qualified foreign investor' regime starting from 1 November.

Under the changes, foreign investors will see a simplified application procedure, relaxed qualification and documentary requirements, a simplified review procedure, a shorter review cycle (10-day approval decisions from the CSRC), and reduced information reporting requirements.

Qualified foreign investors are allowed to trade in depositary receipts, stock options, government-backed and corporate bonds, asset-backed securities, and to participate in margin trading, bond repo transactions, and securities borrowing and lending.

On November 1st, 2020, the SSE (Shanghai Stock Exchange) and SZSE (Shenzhen Stock Exchange) released guidelines on the new arrangements.