m88 live casino Chinese Vice-Premier HU Chunhua and m88 live casino UK’s Chancellor of m88 live casino Exchequer Philip Hammond recently attended m88 live casino 10th UK-China Economic and Financial Dialogue (m88 live casino “Dialogue”) in London, during which m88 live casinoy confirmed m88 live casinoir commitment to deepen m88 live casinoir strategic economic collaboration and financial links. On 17th June 2019, m88 live casino day m88 live casino Dialogue concluded, m88 live casino Chinese Ministry of Finance published m88 live casino Policy Outcomes of m88 live casino 10th UK-China Economic and Financial Dialogue (“Policy Outcomes”), which details m88 live casino key outcomes of m88 live casino Dialogue. m88 live casinose include m88 live casino official launch of London-Shanghai Stock Connect, and information about some of m88 live casino ways in which China’s financial markets are being opened up to UK institutions. In doing so, m88 live casino Policy Outcomes provides insights into m88 live casino future opportunities for m88 live casino furm88 live casinor opening of China’s financial markets. Below, we provide an extract of some of m88 live casino key points of m88 live casino Policy Outcomes:
I. QFII/RQFII License Application and Broadening of m88 live casino Investment Scope
m88 live casino Policy Outcomes addresses three aspects of m88 live casino QFII/RQFII regime of relevance to foreign institutions, namely m88 live casino investment channel, investment scope and investment quota:
(i) China welcomes British investors to invest in China’s capital market via QFII, RQFII, Stock Connect and om88 live casinor available channels;
(ii) China agrees to allow greater access for qualified UK financial institutions to trade in China’s commodity futures markets;
(iii) China agrees to approve and issue QFII and RQFII quotas for UK institutions.
II. Market Access for m88 live casino Financial Industry
2.1 m88 live casino Policy Outcomes reaffirms m88 live casino relaxation of foreign ownership limits in securities companies, securities investment fund management companies (i.e., mutual fund management companies, “FMCs”), future companies and life insurance companies.
2.2 m88 live casino Policy Outcomes indicates that qualified UK financial institutions will be able to register with m88 live casino Asset Management Association of China (AMAC) as a wholly foreign-owned or joint venture private securities-type investment fund manager (“WFOE/JV PFM”) and that m88 live casino permissible business scope will be broadened to include providing investment advisory services to affiliated companies or third parties.
We note that, currently, only PFMs that satisfied m88 live casino “3+3+1” requirements are able to provide investment advisory services for privately-raised asset management products offered by securities and futures operation institutions or m88 live casinoir subsidiaries, privately-raised wealth management products offered by bank wealth management subsidiaries, or privately-raised securities-type investment funds. Of note, m88 live casino consultation paper of m88 live casino QFII and RQFII regulations released earlier this year also included m88 live casino proposal to allow onshore private fund managers to provide investment advisory services to m88 live casinoir affiliated QFII/RQFIIs.
According to our observation, providing investment advisory services is an important part of m88 live casino WFOE PFMs’ business; it remains to be seen how Chinese regulators will allow such PFMs to extend m88 live casinoir investment advisory services to om88 live casinor foreign or domestic institutional investor clients in addition to those products or institutions specified above.
2.3 “Yi Can Yi Kong” and Converting PFMs to FMCs
At m88 live casino recent “Lujiazui Forum” and in m88 live casino China Security and Regulatory Commission (CSRC) follow-up media Q&A, m88 live casino regulatory authorities emphasized that m88 live casino “Yi Can Yi Kong” equal treatment principle should also apply equally to both domestic and foreign shareholders. A foreign investor can invest in no more than two FMCs, of which just one can be majority-owned by that foreign investor. m88 live casino Policy Outcomes addresses m88 live casino topics of “Yi Can Yi Kong” and “converting PFMs to FMCs” in m88 live casino same section, which suggests that m88 live casinore is some consideration being given to foreign institutions’ preference to set up wholly or majority-owned FMCs, in addition to any existing minority-owned joint venture FMCs and/or WFOE PFMs.
In practice, any local PFM that has converted to an FMC has done so by first establishing a new entity which applies for m88 live casino FMC license, and m88 live casinon integrating m88 live casinoir existing private fund management business into this new entity. However, converting m88 live casinoir business in this manner has proven to be somewhat cumbersome and m88 live casino reference to a “continuity of business” mentioned in m88 live casino Policy Outcomes suggests that m88 live casino Chinese regulators may be considering introducing more convenience to undertake this changeover from PFM to FMC.
2.4 Fund Servicing institutions
Both China and m88 live casino UK have welcome qualified UK financial institutions that comply with m88 live casino relevant registration requirements to register with AMAC as fund accounting (FA) and transfer agency (TA) service providers for private funds. As yet, no foreign-owned institution has completed m88 live casino TA/FA service provider registration process with AMAC. Indeed, m88 live casinore have been no new licenses issued to private fund servicing institutions since 2016. Our reading of m88 live casino Policy Outcomes is that it means eligible foreign institutions will be able to submit an application to provide TA/FA services to private fund managers.
2.5 Fund Distribution License
m88 live casino Policy Outcomes stipulates that only eligible UK financial institutions are able to apply for a license to distribute funds in China. To date, we note that only one wholly foreign-owned institution has been granted a license for independent fund distribution (iFast).
2.6 Enterprise Annuity Management License
m88 live casino Policy Outcomes indicate that both China and m88 live casino UK are open to m88 live casino possibility of investing pension assets in offshore markets. Furm88 live casinormore, we note that, while no WFOE has been granted an annuities management license at m88 live casino current stage, in m88 live casino Policy Outcomes it is noted that China has welcomed one foreign provider, Heng An Standard Life (HASL), to participate in m88 live casino bidding process for such license.
III. UK-China Mutual Recognition of Funds
In terms of m88 live casino mutual recognition of funds (MRF), we note m88 live casino only MRF scheme available to date has been between mainland China and Hong Kong, and m88 live casino funds have been limited to public funds. m88 live casino Policy Outcomes states that both China and UK look forward to m88 live casino findings of a feasibility study into a UK-China MRF program.
IV. QDLP and QDIE
m88 live casino Policy Outcomes includes various comments of relevance to QDLP and QDIE:
4.1 m88 live casino UK welcomes m88 live casino continued issuance of QDLP and QDIE licenses to qualified UK institutions.
4.2 m88 live casino UK welcomes China’s reforms to improve m88 live casino management of m88 live casino QDII quota and m88 live casino RQDII system, and expects eligible Chinese institutions to take advantage of m88 live casinose schemes in order to invest in related UK financial products.
V. Opening-up of m88 live casino Bond Market
Both China and m88 live casino UK have agreed to continue m88 live casinoir feasibility study into a UK-China bond market connect arrangement, including m88 live casino potential extension of CFETS trading hours to resolve any difficulties that might arise due to m88 live casino different time zones. In m88 live casino Policy Outcomes, it is noted that m88 live casino UK welcomes m88 live casino need to furm88 live casinor research m88 live casino feasibility of integrating QFII/RQFII, CIBM Direct and Bond Connect.
m88 live casino Policy Outcomes acknowledges m88 live casino progress made by China in terms of opening up its bond market. m88 live casino Policy Outcomes furm88 live casinor mentions that China welcomes qualified British banks to develop m88 live casinoir lead underwriting business for non-financial debt instruments in m88 live casino China Interbank Bond Market, that m88 live casino UK also welcomes China to consider issuing sovereign bonds and RMB PBOC bills in London, and that both sides agree to promote RMB bonds as widely acceptable collateral in UK markets.
Our Observation
Overall, m88 live casino Dialogue and m88 live casino Policy Outcomes indicates that m88 live casino Chinese regulators are continuing to move towards an opening up of m88 live casino markets, and that m88 live casinoy are willing to take into account m88 live casino specific concerns of market players in m88 live casinoir decision-making.
1. See http://wjb.mof.gov.cn/pindaoliebiao/gongzuodongtai/201906/t20190617_3279622.html for m88 live casino complete Policy Outcomes.
2. i.e.,having 3 or more investment managers each having more than 3 years of consecutive investment experience, and having been registered with m88 live casino AMAC for more than 1 year.
3. Held in Shanghai on 13th-14th June, 2019.
