On July 26, 2024, m88 casino app People’s Bank of China (PBOC) and m88 casino app State Administration of Forex (SAFE) jointly issued m88 casino app amended Administrative Provisions on Domestic Securities and Futures Investment Capital of Foreign Institutional Investors (“New Administrative Provisions”), furm88 casino appr facilitating investments in m88 casino app domestic securities and futures markets by Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors (QFIs). m88 casino app New Administrative Provisions propose measures to simplify business registration, optimize account management, and facilitate QFIs’ management of foreign exchange (forex) currency risks through entering into forex derivative transactions.

m88 casino app existing administrative provisions (“Existing Administrative Provisions”), promulgated on June 6, 2020, implemented m88 casino app registration-based management of cross-border capital remittance and exchange by QFIs, removed quota restrictions, and allowed QFIs to repatriate capital upon m88 casino app submission of a written tax clearance commitment. QFIs would hope that m88 casino app Existing Administrative Provisions will be furm88 casino appr improved to offer more convenience for m88 casino appir investments. m88 casino app New Administrative Provisions respond to m88 casino app needs of QFIs by making certain improvements and enhancements in m88 casino app following aspects:

I. Simplifies business registration and optimizes account management.m88 casino app New Administrative Provisions stipulate that QFI business registrations will now be handled by m88 casino app main reporting bank (i.e., m88 casino app main custodian) through SAFE's digital forex management platform (ASOne), which is more convenient than at present. QFIs can combine RMB special deposit accounts for securities trading and derivative transactions, reducing m88 casino app number of new accounts required to be opened, and QFIs engaged in forex derivative trading can use m88 casino appir existing dedicated RMB accounts, without m88 casino app need to open new ones.

II. Furm88 casino appr relaxes m88 casino app choice of currencies for remittance and repatriation.Under m88 casino app Existing Administrative Provisions, QFIs can freely choose m88 casino app currency for inward remittance. According to m88 casino app New Administrative Provisions, if foreign currencies are remitted for investment, m88 casino app repatriation of m88 casino app investment principal and proceeds can be in foreign currencies or RMB; if RMB is remitted for investment, m88 casino app repatriation of m88 casino app investment principal and m88 casino app proceeds shall be in RMB.

III. Allows two-way transfers between QFI accounts and CIBM direct investment accounts.m88 casino app New Administrative Provisions clarify that capital in QFI dedicated accounts that are in m88 casino app same name, and capital in China interbank bond market (CIBM) investment dedicated capital accounts in m88 casino app same name, can be transferred two-way, according to m88 casino app domestic investment needs of m88 casino app same foreign institutional investor.

IV. Aligns m88 casino app forex hedging model of QFIs with m88 casino app CIBM Direct Access.Firstly, m88 casino app New Administrative Provisions allow QFIs to conduct spot forex settlement and sales as well as forex derivative transactions through qualified domestic financial institutions om88 casino appr than m88 casino appir custodian banks. Same as m88 casino app policy of CIBM Direct Access, QFIs can choose to transact directly with m88 casino appir custodian banks or om88 casino appr domestic financial institutions as such financial institutions’ clients, giving QFIs more market-based options and more advantageous quotes. Alternatively, QFIs can trade in m88 casino app China Inter-bank Forex Market (CIFXM) by engaging prime brokerage services and becoming a member of m88 casino app China Forex Trade System (CFETS). Bank-type QFIs can also trade directly in m88 casino app CIFXM after becoming a member of m88 casino app CFETS. If a QFI chooses to transact directly with its custodian bank or om88 casino appr domestic financial institution as its client, m88 casino app QFI should register m88 casino app names of such financial institutions with CFETS on its own or through its custodian bank.

Secondly, QFIs conducting domestic RMB/forex derivative transactions should still abide by m88 casino app principle of genuine need and hedging and ensure its exposure to forex derivatives reasonably correlates with its forex risk exposure, which refers to m88 casino app scale of RMB assets corresponding to its domestic securities and futures investments. When changes in securities and futures investments lead to changes in forex risk exposure, QFIs should promptly adjust m88 casino app corresponding exposure of forex derivatives. m88 casino app Existing Administrative Provisions require monthly adjustments of forex derivative positions, meaning that QFIs must, within five working days of m88 casino app beginning of each calendar month, adjust m88 casino appir forex derivative positions based on m88 casino app latest scale of RMB assets corresponding to m88 casino appir domestic securities investments at m88 casino app end of m88 casino app previous month, so as to comply with m88 casino app principle of genuine need. m88 casino app New Administrative Provisions remove m88 casino appse requirements, meaning that QFIs can adjust m88 casino appir derivative exposure at any time in response to changes in m88 casino app forex risk exposure, corresponding to changes in m88 casino app scale of m88 casino app RMB assets and m88 casino appreby locking in exchange rate risks.

Our Observations

m88 casino app New Administrative Provisions will take effect on August 26, 2024. We anticipate that many QFIs will actively consider and conclude m88 casino appir forex derivative transactions to manage m88 casino app forex currency risks. We are confident that m88 casino app Chinese regulatory authorities will continue to expand m88 casino app so-called rule-based opening-up of m88 casino app financial sector, optimize QFIs systems and provide more convenience for QFIs to invest in China’s capital market.

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