Posted inRegulation

MAS allows local financial institutions for RQFII licence

The Monetary Authority of Singapore is to allow eligible financial institutions to apply for a licence permitting them to invest in China’s onshore securities market.

Holding a renminbi qualified foreign institutional investor licence will enable the institutions to offer RMB investment products into the retail and institutional space.

Eligible institutions will include registered and licensed fund management companies, as well as banks and insurance companies, which are exempted from the requirement to hold a capital markets services licence, the city regulator said.

‘Key role in RMB eco-system’

The MAS said applications are to be made to the China Securities Regulatory Commission through approved custodian banks. After obtaining the RQFII, the institutions should apply to the State Administration of Foreign Exchange for an RQFII investment quota and where necessary, to the People’s Bank of China for access to the Chinese inter-bank bond market subsequently.

The CSRC requires that all applications for the RQFII to be accompanied by a confirmation from MAS on the licencing status of the institution and its regulatory records for the past three years.

“The introduction of the RQFII scheme in Singapore is expected to play a key role in developing a vibrant RMB eco-system here. The scheme will spur the development of a broader range of RMB products and services to meet investment needs,” the MAS said.

This announcement follows the pact between the two countries in October that enabled direct currency trading between the Chinese yuan and Singapore dollar and extension of the RQFII programme to Singapore, with an aggregate quota of RMB50bn.

Last week, Haitong International Securities Group, which received a capital markets service licence from the MAS, established its first company in Singapore‚ aiming to tap the demand for Renminbi-denominated products.

In a bid to promote the RMB as an international currency, China in October expanded the pilot scheme beyond Hong Kong, allocating RMB80bn for London-based firms. UK-based Ashmore Group became the first fund manager outside of Hong Kong to receive such a licence.

Part of the Mark Allen Group.