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China to combine QFII and RQFII schemes

Other more recent inbound initiatives, such as the stock and bond connect programmes, have made the QFII and RQFII less relevant.

China’s regulators will be combining the qualified foreign institutional investor (QFII) and the renminbi qualified foreign institutional investor (RQFII) programmes into one scheme, effective 1 November, according to a joint statement from China Securities Regulatory Commission (CSRC), the People’s Bank of China and the State Administration of Foreign Exchange (SAFE) last Friday.

Both the QFII and RQFII are inbound schemes allow foreign institutional investors, including fund managers, to invest in China’s onshore equities and bond markets.

The move follows after regulators abolished the quota restrictions in both programmes in June. Qualified foreign investors only need to go through a registration-based process to transfer money into the country.

The new combined inbound scheme will not only simplify the application process but also expand its investment scope to attract foreign capital, according to Ivan Shi, director of data analytics at Z-Ben Advisors.

Shi explained that currently, QFII and RQFII investors are only allowed to invest in stocks, bonds, mutual funds, stock index futures and derivatives in the foreign exchange market. Under the combined scheme, the investment scope will be expanded to include private investment funds, bond repurchase agreements, financial and commodity futures and options.


Since the implementation of the QFII system in 2002 and the implementation of the RQFII system in 2011, at least 400 institutional investors from 31 countries and regions have invested in China’s financial market through this channel, according to SAFE.

However, other more recent initiatives, such as the stock and bond connect programmes and the China Interbank Bond Market, share the same investment scope and have made it easier for foreign investors to access the Chinese onshore market.

“The advantages of the QFII and RQFII have been diminishing since the launch of the Shanghai-Hong Kong Stock Connect in 2014 and the Shenzhen-Hong Kong Stock Connect, which are more convenient to directly invest in the mainland’s financial markets, ” Shi said previously.

Part of the Mark Allen Group.