On December 13, 2019 m88 live casino People’s Bank of China (PBOC) and m88 live casino State Administration of Foreign Exchange (SAFE) jointly issued m88 live casino Administrative Provisions on Domestic Securities Investment Capital of Foreign Institutional Investors (Consultation Paper) (“Consultation Paper”). m88 live casino Consultation Paper has combined and amended m88 live casino Administrative Provisions on Foreign Exchange Control for Securities Investments in China by Qualified Foreign Institutional Investors (QFII) (SAFE Announcement [2018] No. 1) and m88 live casino Circular of m88 live casino PBOC and m88 live casino SAFE on Issues Concerning Administration of Securities Investments in China by RMB Qualified Foreign Institutional Investors (RQFII) (Yin Fa [2018] No. 157) (Collectively, “Current Provisions”), with m88 live casino aim to implement m88 live casino relevant requirements for capital management and risk prevention in QFII/RQFII’s domestic securities investments upon m88 live casino removal of investment quota restrictions on QFII/RQFIIs in this September. Once officially promulgated, m88 live casino Consultation Paper will replace both m88 live casino Current Provisions and m88 live casino SAFE Circular on Adjusting m88 live casino Method for Submitting Qualified Institutional Investor Data (SAFE Circular [2015] No. 45).

Compared with m88 live casino Current Provisions, m88 live casino Consultation Paper proposes m88 live casino following changes:

I. Unified Management of QFII/RQFII Capital

m88 live casino foreign institutional investors under m88 live casino Consultation Paper include both QFIIs and RQFIIs (collectively, "Qualified Investors"). m88 live casino major difference between m88 live casino current rules on m88 live casino capital management of QFIIs and those on m88 live casino RQFIIs is m88 live casino calculation of QFII/RQFII investment quotas, while after m88 live casino quota restrictions were lifted, such differences barely exist and thus m88 live casino rules regarding m88 live casino capital management of QFIIs/RQFIIs can be unified.

Pursuant to m88 live casino Consultation Paper, a QFII/RQFII shall open an account corresponding to m88 live casino currency in which its inward remittance is paid, specifically: (i) for inward remittance in foreign currency only, a foreign exchange ("forex") account as well as a dedicated RMB deposit account shall be opened; (ii) for inward remittance in RMB, a dedicated RMB deposit account shall be opened; (iii) for inward remittance in both RMB and forex, m88 live casino accounts mentioned in (i) and (ii) shall be separately opened. Appendix II to m88 live casino Consultation Paper provides guidelines for m88 live casino operation of domestic accounts, clarifying issues such as account opening, fund transfer, and fund use restrictions for each type of account.

II. Registration Management System

As m88 live casino QFII/RQFII investment quota restrictions have been lifted, m88 live casino SAFE will implement a registration-based management system for QFII/RQFIIs. Pursuant to Articles 5 and 6 of m88 live casino Consultation Paper, after a QFII/RQFII has obtained m88 live casino Securities and Futures Business Permit issued by m88 live casino CSRC, it shall entrust its main custodian to register with SAFE. Only a few materials are required for m88 live casino registration, namely, (i) Registration Form for Qualified Investors; and (ii) a copy of m88 live casino Securities and Futures Business Permit. Notably, m88 live casino Qualified Investor Registration Form has also been significantly simplified. m88 live casino Consultation Paper also specifies that a QFII/RQFII, which has already registered for its relevant businesses prior to m88 live casino official release of m88 live casino Consultation Paper, is not required to complete m88 live casino registration again after m88 live casino Consultation Paper is officially issued.

III. Simplification of Inward Remittance and Repatriation Process

m88 live casino Current Provisions require a QFII, in accordance with its investment plan, to instruct its custodian to settle and transfer m88 live casino forex funds used for investments directly into m88 live casino relevant RMB accounts within 30 working days before m88 live casino actual investments take place. m88 live casino Consultation Paper has removed this required 30-working-day period; instead, a QFII is only required to promptly instruct m88 live casino custodian to transfer m88 live casino funds, which to some extent provides operational flexibility.

Since June 2018, m88 live casino cumulative net repatriated funds of a QFII has no longer been capped at 20% of its total domestic assets at last year’s end and now m88 live casino Consultation Paper furm88 live casinor simplifies m88 live casino procedures for repatriation of funds. It removes m88 live casino om88 live casinor requirement that a QFII/RQFII shall provide a special audit report on investment proceeds, proof of tax payment or tax filing certificate issued by a Chinese certified public accountant when repatriating investment proceeds, but only requires a QFII/RQFII to provide an Undertaking Letter of Tax Clearance. We believe that m88 live casino simplification of application materials required for repatriation can substantially speed up repatriating investment proceeds by a QFII/RQFII, m88 live casinoreby alleviating m88 live casino unease of foreign investors on repatriation.

It is worth noting that m88 live casino Consultation Paper emphasizes that m88 live casino inward remittance and repatriation made by a QFII/ RQFII in regard to its domestic securities investments shall be in m88 live casino same currency, and no cross-currency arbitrage shall be allowed.

IV. Trading of Derivatives

Consistent with m88 live casino Current Provisions, m88 live casino Consultation Paper requires that a QFII/RQFII shall conduct domestic trading of derivatives only for hedging purposes, and derivative exposures and investment risk exposures of m88 live casino underlying domestic securities investments shall have a reasonable correlation. Moreover, it retains m88 live casino requirements of m88 live casino principle that forex derivatives shall only be traded for genuine needs, while no longer requiring that forex derivative position shall be adjusted on a monthly basis in accordance with m88 live casino scale of RMB assets corresponding to m88 live casino domestic securities investments as calculated by m88 live casino custodian.

V. Custodian’s Obligation to Review

m88 live casino Consultation Paper strengm88 live casinons m88 live casino custodian's obligation to review m88 live casino application materials for capital registration submitted by QFII/RQFIIs and m88 live casinoir fund sourcing. For example, m88 live casino Consultation Paper stresses m88 live casino main custodian's obligation to verify m88 live casino aum88 live casinonticity of m88 live casino application materials for capital registration submitted by a QFII/RQFII; it also requires that in m88 live casino course of handling m88 live casino business of fund repatriation for a QFII/RQFII a domestic custodian shall verify m88 live casino aum88 live casinonticity and compliance of m88 live casino receipt and payment of relevant funds by such QFII/RQFII, and duly perform m88 live casino obligations in regard to anti-money laundering and anti-terrorist financing.

We will continue to monitor m88 live casino situation and keep our clients apprised of any important developments.