Expansion Greenlighted for Certain R/QFII Investment Products

Around one month ago, the China Securities Regulatory Commission (CSRC), the People's Bank of China (PBoC) and the State Administration of Foreign Exchange (SAFE) promulgated the combined R/QFII rules and expanded the investment scope of R/QFIIs to allow them to trade exchange-traded bond repos, depository receipts, NEEQ-listed securities, financial futures, commodity futures, options, etc., and to engage in margin trading and securities lending with China Securities Finance Corporation Limited (CSF). On 30 October 2020, mainland Chinese exchanges and other financial market infrastructures published relevant implementing rules two days in advance of the effectiveness of the combined R/QFII rules. These implementing rules detail some of the expanded investment products (i.e., depository receipts, NEEQ-listed securities, securities lending with CSF) and elaborate on relevant trading, settlement and monitoring arrangements. There is, however, no indication when other expanded investment products will become available.
Today is the first trading day after the new R/QFII rules came into effect, and foreign investors have already responded. China International Capital Corporation Limited (CICC) announced this morning that it had placed the first QFII market order for securities lending with CSF at 9:15 AM. [1]
We set out below a matrix of the detailed implementing rules issued by the relevant financial market infrastructures.


Based on the implementing details above, we set out below a checklist for the major types of newly opened investment products to show their availability status:

As the checklist above illustrates, only some of the newly expanded investment products will be available upon the effectiveness of the new R/QFII rules. Bond repos, stock options and margin trading will become available at a later stage. There is still no clear sign as to the availability of products and trading of other financial futures (e.g., treasury bond futures), commodity futures and options.
Apart from clarifying available investment products, the financial market infrastructures have also specified detailed trading and monitoring arrangements to further facilitate R/QFII investments, such as non-trade transfers, simplifying information reporting procedures, removing the limit on the number of securities brokers, etc. We believe the new R/QFII scheme shows encouraging beginnings and foreign investors should keep a close eye on further developments for those items that are still pending.
[1] Please see the CICC press release at https://www.cicc.com/cmscontent/91150.html (Chinese).
[2] The SSE rule application guidelines are available at http://www.sse.com.cn/lawandrules/sserules/main/trading/universal/c/c_20201030_5250860.shtml (Chinese).
[3] The SSE filing guidelines are available at http://www.sse.com.cn/lawandrules/guide/jyznlc/jyzn/c/c_20201030_5250953.shtml (Chinese).
[4] Please see the SSE press release at http://www.sse.com.cn/aboutus/mediacenter/hotandd/c/c_20201030_5250820.shtml (Chinese) and http://english.sse.com.cn/news/newsrelease/c/5251119.shtml (English).
[5] The SZSE implementing rules are available at http://www.szse.cn/disclosure/notice/t20201030_582824.html (Chinese).
[6] Please see the SZSE press release at http://www.szse.cn/aboutus/trends/news/t20201030_582827.html (Chinese).
[7] The CFFEX notice is available at http://www.cffex.com.cn/jystz/20201030/24790.html (Chinese) and http://www.cffex.com.cn/en_new/ExchangeNews/20201030/24791.html (English).
[8] Please see the CFFEX press release at http://www.cffex.com.cn/jysdt/20201030/24792.html (Chinese).
[9] The NEEQ implementing rules are available at http://www.neeq.com.cn/important_news/200009280.html (Chinese).
[10] The NEEQ filing guidelines are available at http://www.neeq.com.cn/important_news/200009278.html (Chinese).
[11] Please see the NEEQ press release at http://www.neeq.com.cn/important_news/200009282.html (Chinese).
[12] The CSDCC notice is available at http://www.chinaclear.cn/zdjs/gszb/202010/59baa1c8eab0423891815cc34b153d00.shtml (Chinese).
[13] The CSDCC implementing rules are available at http://www.chinaclear.cn/zdjs/editor_file/20201030183705568.pdf (Chinese).
[14] The CSDCC Beijing branch guidelines are available at http://www.chinaclear.cn/zdjs/editor_file/20201030165607914.pdf (Chinese).
[15] Please see the CSDCC press release at http://www.chinaclear.cn/zdjs/xgsdt/202010/073c265cf8104c778667ef1a77b7ed0a.shtml (Chinese).
[16] The CSF notice is available at http://www.csf.com.cn/publish/main/1009/1010/20201030175735698195162/index.html (Chinese).