Alan Duffy, CEO, HSBC Ireland (Photo: Jason Clarke)
The Irish unit of an international asset management company has become the first institutional investor in Ireland to receive regulatory approval as a Renminbi Qualified Foreign Institutional Investor (RQFII) thanks to HSBC Securities Services (HSS).
This gives the asset management company the ability to invest in mainland China’s bond and equity markets as well as a licence to trade from the China Securities Regulatory Commission through the RQFII programme in Ireland.
What is the Renminbi Qualified Foreign Institutional Investor (RQFII)?
HSS, acting as the company’s RQFII custodian in China, helped it navigate the licencing process.
China’s RQFII programme was established in 2011 to facilitate foreign investment via offshore renminbi funding. In this programme there are 19 markets; Japan was the latest edition in May 2018.
In 14 of these markets, HSBC is the only RQFII custodian bank servicing clients and has helped banks in 12 of those gain the first licence in their respective countries.
This programme also allows there to be investment in renminbi-demoninated products carried out by eligible financial institutions. These include stocks, bonds, securities investment funds, index futures, access to the equity capital markets through initial public offerings, rights issues and convertible bond offerings.
Earlier this month, China’s foreign exchange regulator announced it will scrap the 20% monthly repatriation limit under the dollar-denominated QFII scheme.
Richard Godfrey, acting Global Head of HSS commented:
This RQFII licence and mandate provides yet another outstanding example of how we can help clients gain access to the Chinese onshore market and then facilitate and support their investments in a range of securities and products.
He continued: “This licence is particularly important because Ireland is one of the key fund domicile countries globally.”
All told this will remove lockup periods for investment principal under QFII and RQFII. Under these programmes, licenced investors will now be allowed to conduct foreign exchange hedging in China.