China to include private equity in QFII program

The securities regulator is gathering opinions from investments bankers regarding the introduction of a wider variety of QFII participants, Shanghai Daily reported, citing industry sources.

Under the existing QFII program, foreign institutions are required to obtain an investment license from the CSRC as well as a quota from the State Administration of Foreign Exchange (SAFE) before they are allowed to invest in A shares. Brokerages, banks, mutual funds and insurers are among the existing QFIIs.

"The regulator's attitude is open and is willing to permit more qualified investors as long as they abide by rules and regulations," a banker close to the regulator told local media. "They are thinking about introducing hedge funds and even private equity companies. But the prerequisite is that risks must be controlled."

Last month, China raised the combined QFII quota by $50 billion to $80 billion and is reportedly planning to further expand the program. As of April 16, SAFE had approved $3.6 billion in quotas for 28 overseas institutions since the start of the year, as part of the efforts to attract overseas players to participate in the domestic capital markets.

The Chinese government is also said to be in favor of providing larger QFII quotas to long-term investors and will consider lowering the capital threshold for applicants. Meanwhile, the maximum for individual institutional quotas has been raised to $1 billion, up from $800 million in 2009.

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• Topics
• Greater China
• Regulation
• China
• regulation