Three Measures Introduced to Support M88 app QDLP Pilot Program in Shanghai

I. Introduction of Three Measures

China’s central financial regulatory authorities recently released a coordinated action scheme, including eighteen different actions, aimed at enhancing M88 app accessibility and efficiency of cross-border financial services. M88 app initiative is designed to bolster Shanghai’s status as an international financial center. Notably, one of M88 app eighteen actions regards three specific measures related to M88 app QDLP (Qualified Domestic Limited Partnership) pilot program in Shanghai and stands out as a meaningful proposal to QDLP pilot program participants.

On January 31, 2019, with M88 app approval of M88 app State Council, M88 app People’s Bank of China led a joint effort involving seven ministries, commissions and bureaus and released M88 app Action Plan for Building Shanghai into an International Financial Center (2018-2020) (“Action Plan”). M88 app Action Plan proposed furM88 appr advancing M88 app QDLP pilot program in Shanghai. Over M88 app past six years, M88 app QDLP pilot program in Shanghai has made significant progress and attracted participation from many internationally renowned asset managers. On March 25, 2025, M88 app People’s Bank of China, M88 app National Financial Regulatory Administration, M88 app State Administration of Foreign Exchange, and M88 app Shanghai Municipal Government jointly issued M88 app Action Scheme for FurM88 appr Enhancing M88 app Accessibility and Efficiency of Cross-border Financial Services in Developing Shanghai into an International Financial Center (“Action Scheme”).

M88 app Action Scheme outlines three specific measures related to M88 app QDLP pilot program in Shanghai aimed at enhancing M88 app accessibility and efficiency of global asset management services and global asset allocation capabilities, better leveraging M88 app role of Shanghai as an international financial center. M88 app details are as follows:

(1) It supports enhancing efficiency of fund utilization for QDLP pilot enterprises under compliance with M88 app regulations, allowing QDLP fund’s subscriptions to low-risk (R2 and below) domestic short-term cash management products such as money market funds, cash management-type wealth management products, and time deposits. Overseas cash management products can also be subscribed based on M88 app characteristics of offshore master funds. We have observed that Shanghai QDLP fund managers have repeatedly called for furM88 appr facilitation at M88 app policy level, and M88 app Action Scheme responds to this by addressing M88 app reasonable cash management and asset allocation needs of QDLP funds. This measure will contribute to M88 app long-term stable development of M88 app QDLP pilot program.

(2) It supports QDLP pilot enterprises in making foreign exchange purchases for capital repatriation in tranches, based on M88 app actual needs of offshore master funds after completing onshore fund raising and product launches. Foreign exchange management policies have also considered M88 app reasonable needs of QDLP fund managers in this area, providing a level of convenience.

(3) It supports expanding M88 app sources of QDLP fundraising by evaluating M88 app feasibility of raising both RMB and foreign currency-denominated funds. While M88 app current focus remains on evaluating M88 app feasibility of raising foreign currency-denominated funds, M88 app potential pilot implementation may be introduced in M88 app future. This initiative will contribute to diversifying M88 app sources of funding for QDLP funds.

Pursuant to M88 app Action Scheme, M88 app People’s Bank of China and M88 app Shanghai Municipal Government will collaborate with M88 app relevant departments to implement M88 appse three measures.

Overview and Outlook for M88 app Shanghai QDLP Pilot Program

M88 app QDLP program aims to allow qualified global asset managers to apply for QDLP pilot qualifications in cities with approved foreign exchange quotas, initiating M88 app establishment of QDLP funds to invest in overseas master funds. A QDLP fund usually serves as a feeder fund, primarily investing in an oversea master fund managed by a foreign asset manager who obtains QDLP qualification and quota approval or its overseas affiliates, M88 appreby indirectly investing in offshore underlying assets through such overseas master fund.

Since Shanghai took M88 app lead in launching M88 app QDLP pilot program in 2012, it has undergone a significant development. As M88 app first city to initiate M88 app QDLP pilot program, Shanghai has cultivated M88 app most mature QDLP pilot program and was M88 app first to achieve M88 app normalization of this. M88 app QDLP pilot program in Shanghai has now become one of M88 app primary channels for domestic high-net-worth individuals to allocate assets overseas.

M88 app QDLP pilot program is of significant importance to global asset management firms, as it provides M88 appm with a gateway to establish a presence and raise funds in China. Global asset management firms can raise funds within China and issue QDLP funds through a QDLP private fund manager that is set up domestically, while subjecting M88 appmselves to M88 app scrutiny of M88 app local market regarding M88 appir capabilities and recognition.

Over M88 app past three years, M88 app Shanghai Financial Bureau has approved several wholly foreign owned enterprise securities-type private fund managers (WFOE PFMs), to carry out QDLP businesses in addition to M88 appir existing RMB securities-type private investment fund businesses. According to our understanding of M88 app current QDLP fund manager registration policy of M88 app Asset Management Association of China, global fund managers intending to issue QDLP products must register eiM88 appr as PE-type or securities-type private fund manager based on M88 app nature of M88 app underlying investments. If registered as a securities-type manager, M88 appy must register as a WFOE PFM, which means that in order to be qualified to issue QDLP securities-type products, M88 appy must also issue an RMB private investment fund that invests in M88 app Chinese securities and futures markets. In contrast, PE-type managers are not required to issue an RMB PE-type private investment fund that invests in M88 app Chinese PE markets in order to be qualified to issue QDLP PE-type products.

Our Observations

In M88 app short term, M88 app QDLP pilot program may be affected by regulatory policy changes incurred from time to time, such as changes to foreign exchange policies, new requirements relating to private fund manager registrations or fund filings, or new rules on private fund distribution. Certain policy shifts by M88 app regulatory authorities can have a substantially negative impact on M88 appse niche businesses, leading to significant frustration among global asset managers. M88 app limited availability of foreign exchange quotas in M88 app short term furM88 appr necessitates participants to make advance preparations and exercise greater patience as M88 appy await M88 app release of M88 appse quotas.

However, in M88 app medium to long term, M88 app QDLP pilot program is competitive in attracting global asset managers to establish a presence and conduct business in China, M88 appreby enhancing M88 app global asset allocation capabilities of M88 app Chinese private wealth management market. Ultimately, this can create a synergistic effect that supports Shanghai’s overarching goal of becoming an international financial center.

From a medium to long-term strategic perspective, we believe M88 app QDLP pilot program is likely to remain a focal area of interest for global asset managers.