The China Securities Regulatory Commission has reportedly drafted regulation for foreign investors under the Qualified Foreign Institutional Investors (QFII) programme to allow them to trade stock index futures.
QFII investors – which include Martin Currie Investment Management and Gartmore Group, which is set to merge with Henderson Group – will soon be allowed to trade stock index futures for hedging. However, according to the draft, they will not be allowed to use it for speculative purposes.
The trading volume is also restricted: the daily value of futures contracts a QFII investor holds and the daily transaction volume may not exceed the quota approved by the foreign exchange regulator.
However, investors who wish to access Chinese mainland A shares, which are for domestic residents, still have to apply for a QFII licence. Once this has been awarded, they will be given an investment limit by the Chinese government. (article continues below)
Fidelity Investment Managers Hong Kong, for example, has recently applied for the licence and received an indication that it will be granted.
China has indicated it will make its financial markets more accessible to foreign investors and loosen its policy on capping foreign investment.
The public has until February 12 to comment on the China Securities Regulatory Commission’s draft before the final rules are issued.