Qualified Foreign Institutional Investor
Hedge Funds Could Get Qualified Status in China
Hedge funds could eventually be able to trade directly on China's stock markets, depending on China Securities Regulatory Commission's decision on the qualified foreign institutional investor (QFII) license and the restrictions on QFII's. So far, no hedge funds have been approved for the qualified foreign institutional investor licenses but China's regulators appear to be rethinking the situation in favor of loosening the requirements to get the QFII license and then the restrictions on those holding the license.
The China Securities Regulatory Commission has begun a feasibility study of lowering the requirements to win a qualified foreign institutional investor license, as well as loosening the restrictions of QFIIs. It is unclear whether the review will result in changes or when the loosening might come, but CSRC's director of fund supervision said yesterday that changes were planned.
Wang Li told the Shanghai Securities News that CSRC planned to allow more types of foreign investors to receive QFII licenses.
It also plans to streamline the application and approval process, expand the scope of a QFII's investments, clarify tax policy and ease rules on account opening and fund repatriation. Last month, the CRSC boosted QFII quotas from US$50 billion to US$80 billion.
Indeed, China has already opened the door to almost as many new QFIIs (28) in the first four months of 2012 as it did in all of last year.
All told, 158 firms have been granted the licenses, but no hedge funds. Och-Ziff Capital Management applied for a license a few years ago, but it has not been approved.
Among the proposed changes are a reduction in the US$5 billion assets minimum currently required of QFIIs, a level which bars many hedge funds. Currently, firms must also have been in business for five years, blocking new China-focused hedge funds from applying. Source
Related to: Qualified Institutional Investor License
Tags: Qualified Institutional Investor License, Qualified Institutional Investor License, Qualified Foreign Institutional Investor Hedge Funds, Qualified Foreign Institutional Investor Hedge Funds China, Qualified Foreign Institutional Investor Hedge Fund
