In order to support and regulate foreign institutional investors' investment in China bond market, according to the Law of the People's Republic of China on the People's Bank of China, the Regulations on the Administration of Foreign Exchange in People's Republic of China (PRC) and other relevant laws and regulations, the People's Bank of China and the State Administration of Foreign Exchange have formulated the Regulations on the Administration of Foreign Institutional Investors' Investment in China Bond Market, which are hereby printed and distributed to you. Please follow them.
Appendix: Regulations of the People's Bank of China and the State Administration of Foreign Exchange on Fund Management of Foreign Institutional Investors' Investment in China Bond Market.
Attachment 1 10, 2022 Provisions on the Administration of Foreign Institutional Investors' Investment in China Bond Market Funds
Article 1 These Provisions are formulated in accordance with the Law of the People's Republic of China on the People's Bank of China, the Regulations of People's Republic of China (PRC) on Foreign Exchange Control and other relevant laws and regulations in order to support and regulate foreign institutional investors to invest in the China bond market.
Article 2 The term "overseas institutional investors" as mentioned in these Provisions refers to overseas institutions that directly invest in the China bond market through multi-level custody and settlement institutions according to the announcement of the State Administration of Foreign Exchange of the China Securities Regulatory Commission of the People's Bank of China ([2022] No.4).
Article 3 The China bond market mentioned in these Provisions includes the China inter-bank bond market and the exchange bond market.
Article 4 Overseas institutional investors may independently choose the remittance currency for investing in the China bond market. Encourage foreign institutional investors to invest in the China bond market and use RMB for cross-border payment and receipt, and complete cross-border RMB fund settlement through the RMB cross-border payment system (CIPS).
Article 5 Domestic custodians (hereinafter referred to as custodians) and settlement agents of overseas institutional investors shall handle relevant matters on behalf of overseas institutional investors in accordance with the relevant requirements of these Provisions.
Article 6 The People's Bank of China, the State Administration of Foreign Exchange and their branches shall supervise, manage and inspect the accounts, fund receipts and payments and remittances involved in overseas institutional investors' investment in the China bond market according to law.
Article 7 The State Administration of Foreign Exchange shall register and manage the funds invested by overseas institutional investors in the China bond market.
Overseas institutional investors shall, within 10 working days after obtaining the Notice of China Bond Market Investment Filing issued by the relevant financial regulatory authorities or other documents with the same effect, designate a custodian or settlement agent to register on their behalf through the capital account information system of the State Administration of Foreign Exchange (hereinafter referred to as the capital account information system) according to the above documents.
Article 8 The custodian or settlement agent shall, with the industrial and commercial registration certificate generated by the capital account information system, open a RMB or/and foreign exchange special fund account for overseas institutional investors (hereinafter referred to as the bond market special fund account).
The income range of the special account for bond market funds is: the principal remitted by overseas institutional investors from abroad and related taxes (taxes, custody fees, audit fees, management fees, etc.), the proceeds from bond sales, the principal and interest income recovered when bonds expire, the funds related to the transactions of bonds and foreign exchange derivatives that meet the requirements, the funds related to domestic settlement and sale of foreign exchange, and the funds of the special account for the funds of the same name bond market. Funds transferred from QFII)/ RQFII domestic special account with the same name, and other income that meets the requirements of the People's Bank of China and the State Administration of Foreign Exchange.
The expenditure scope of the special account for bond market funds includes: payment of bond transaction price and related taxes and fees, remittance of investment principal and income abroad, transfer of funds related to bond and foreign exchange derivatives transactions in accordance with regulations, transfer of funds related to domestic settlement and sale of foreign exchange, mutual transfer of funds in the special account for bond market funds with the same name, transfer of funds from QFII/RQFII domestic special accounts with the same name, and other expenditures in line with the regulations of the People's Bank of China and the State Administration of Foreign Exchange.
The funds in the special account of the bond market fund shall not be used for other purposes other than investing in the China bond market.
Article 9 When important information such as the name, custodian or settlement agent of an overseas institutional investor changes, the relevant custodian or settlement agent shall register the change in the capital account information system on behalf of the overseas institutional investor.
If an overseas institutional investor withdraws from the China bond market and closes the relevant capital account, it shall, within 30 working days after closing the relevant capital account, go through the cancellation registration on behalf of the overseas institutional investor through the custodian or settlement agent.
Article 10 Funds in QFII/RQFII domestic special account and funds in bond market special account of the same overseas institutional investor can be directly transferred in two directions for domestic securities investment. Subsequent transactions, use of funds and remittance should follow the relevant management requirements of transfer channels.
Article 11 Foreign institutional investors investing in the China bond market shall, in principle, keep the currencies of inward and outward funds consistent, and shall not carry out cross-currency arbitrage between RMB and foreign currency. If "RMB+foreign currency" remits the investment at the same time, the accumulated amount of remitted foreign currency shall not exceed twice the accumulated amount of remitted foreign currency (except after the investment is liquidated). Long-term investment in the China bond market, the above ratio can be appropriately relaxed.
Article 12 Overseas institutional investors may conduct domestic RMB-to-foreign exchange derivative transactions in accordance with the principle of hedging, and manage the foreign exchange risk exposure arising from investing in the China bond market.
Article 13 Overseas banking institutional investors may choose one of the following channels to conduct spot settlement and sale of foreign exchange and foreign exchange derivatives transactions:
(1) directly trading with custodians, settlement agents or other domestic financial institutions as customers.
(2) Apply to become a member of China Foreign Exchange Trading Center (hereinafter referred to as the Foreign Exchange Trading Center) and directly enter the inter-bank foreign exchange market for trading.
(3) Apply to become a member of the foreign exchange trading center and enter the inter-bank foreign exchange market through the principal brokerage business.
Article 14 Overseas non-bank institutional investors may choose one of the following channels to conduct spot settlement and sale of foreign exchange and foreign exchange derivatives transactions:
(1) directly trading with custodians, settlement agents or other domestic financial institutions as customers.
(2) Apply to become a member of the foreign exchange trading center and enter the inter-bank foreign exchange market through the principal brokerage business.
Article 15 If an overseas institutional investor chooses the channels specified in Item 1 of Article 13 and Item 1 of Article 14 of these Provisions and needs to open a special foreign exchange account in a domestic financial institution other than the custodian or settlement agent, it may do so with the industrial and commercial registration certificate. The special foreign exchange account is specially used to handle fund settlement, profit and loss processing and margin management under spot settlement and sale of foreign exchange and foreign exchange derivative transactions, and cross-border fund receipt and payment is handled through the special fund account in the bond market.
Article 16 If an overseas institutional investor chooses the channels specified in the first paragraph of Article 13 and the first paragraph of Article 14 to trade foreign exchange derivatives, it shall file the list of financial institutions with the foreign exchange trading center in advance by itself or through its custodian or settlement agent; The adjustment of financial institutions shall be filed with the foreign exchange trading center in advance.
Article 17 Foreign institutional investors shall abide by the following provisions when trading foreign exchange derivatives:
(1) There is a reasonable correlation between the risk exposure of foreign exchange derivatives and foreign exchange risk exposure. Foreign exchange risk exposure includes principal, interest and market value changes of bond investment.
(2) When changes in bond investment lead to changes in foreign exchange risk exposure, adjust the corresponding exposure of foreign exchange derivatives within five working days or five working days at the beginning of the next month.
(3) According to the actual needs of foreign exchange risk management, trading mechanisms such as extension, reverse settlement, full or differential settlement can be flexibly selected, and gains and losses can be settled in RMB or foreign currency.
(4) Before trading foreign exchange derivatives for the first time, overseas institutional investors shall submit a written commitment to abide by the hedging principle to domestic financial institutions or foreign exchange trading centers.
Article 18 A custodian or settlement agent shall, when handling the remittance of funds for overseas institutional investors, examine the authenticity and compliance of the receipt and payment of corresponding funds, and earnestly fulfill the obligations of anti-money laundering and anti-terrorist financing. Overseas institutional investors shall cooperate with the custodian or settlement agent to perform the above responsibilities and provide true and complete data and information to the custodian or settlement agent.
Article 19 Custodians, settlement agents and relevant domestic financial institutions shall follow the Measures for the Administration of RMB Bank Settlement Accounts (promulgated by Order No.5 of the People's Bank of China [2003]) and the Measures for the Administration of RMB Cross-border Receipt and Payment Information Management System (promulgated by Yinfa [20 17] 126). Notice of the General Office of the People's Bank of China on Improving the Data Submission Process of Inter-bank Business of RMB Cross-border Receipt and Payment Information Management System (No.17) and other relevant regulations, and submit relevant information and data of overseas institutional investors.
Overseas institutional investors, custodians, settlement agents, relevant domestic financial institutions, etc. Should be in accordance with the detailed rules for the implementation of the declaration of balance of payments statistics through banks (Huifa [2022] No.22) and the Guidelines for the Declaration of Balance of Payments Statistics through Banks (version 20 19) (Huifa [2065438+09] No.25). Relevant information and data shall be submitted in accordance with the Statistical System of Foreign Financial Assets, Liabilities and Transactions (document Huifa [202 1]36) and the Notice of the State Administration of Foreign Exchange on Issuing the Foreign Exchange Business Data Collection Specification of Financial Institutions (version) (document Huifa [2022] 13).
Article 20 Where a domestic financial institution handles spot settlement and sale of foreign exchange for overseas institutional investors through the channels specified in the first paragraph of Article 13 and the first paragraph of Article 14 of these Provisions, it shall fulfill its statistical and reporting obligations to the State Administration of Foreign Exchange according to the spot settlement and sale of foreign exchange by customers; If the spot settlement and sale of foreign exchange is handled for overseas institutional investors through the channels specified in Item (2) and Item (3) of Article 13 and Item (2) of Article 14 of these Provisions, statistics shall be made according to the transactions in the inter-bank foreign exchange market.
Domestic financial institutions shall abide by the following provisions when handling foreign exchange derivatives business for overseas institutional investors through the channels specified in the first paragraph of Article 13 and the first paragraph of Article 14 of these Provisions:
(1) According to the regulations of the foreign exchange trading center, submit the foreign exchange derivatives trading information of overseas institutional investors daily.
(2) As a customer's foreign exchange derivative business, it shall fulfill its statistical and reporting obligations to the State Administration of Foreign Exchange.
Foreign institutional investors who choose direct entry or main brokerage in the inter-bank foreign exchange market to trade foreign exchange derivatives shall submit relevant trading information in accordance with the provisions of the foreign exchange trading center.
Domestic financial institutions shall handle spot settlement and sale of foreign exchange and foreign exchange derivatives business for overseas institutional investors in accordance with the channels specified in Item 1 of Article 13 and Item 1 of Article 14 of these Provisions, and use third-party trading systems, platforms or facilities other than their internal trading systems, which shall comply with relevant regulatory provisions.
Article 21 The People's Bank of China and the State Administration of Foreign Exchange shall impose penalties on overseas institutional investors, custodians, settlement agents and related domestic financial institutions in accordance with the Law of the People's Republic of China on the People's Bank of China and the Regulations of People's Republic of China (PRC) on Foreign Exchange Control respectively:
(1) Failing to register as required.
(2) Failing to handle the settlement, sale and payment of foreign exchange or the remittance and remittance of funds in accordance with regulations.
(3) Failing to open or close an account according to regulations, or failing to use an account according to regulations.
(4) Failing to handle the business of foreign exchange derivatives according to regulations.
(5) Failing to submit information and data as required, or submitting incomplete and untrue information and data, or providing false materials, data or certificates, etc.
(6) Failing to declare the balance of payments statistics and the settlement and sale of foreign exchange in accordance with regulations.
Article 22 These Provisions shall apply to overseas central banks or monetary authorities, other official reserve management institutions, international financial organizations and sovereign wealth funds that invest in the China bond market through custodians or settlement agents (commercial banks).
Article 23 The materials submitted by overseas institutional investors in accordance with these Provisions shall be in Chinese. If both Chinese and foreign versions are submitted, the Chinese version shall prevail.
Article 24 The People's Bank of China and the State Administration of Foreign Exchange shall be responsible for the interpretation of these Provisions.
Article 25 These Provisions shall be implemented as of June 65438+1October 65438+1October 2023. Notice of the State Administration of Foreign Exchange on Relevant Issues Concerning the Management of Foreign Exchange Accounts of Overseas Central Bank Institutions Investing in the Inter-bank Market (Huifa [2015] No.43), Notice of the State Administration of Foreign Exchange on Relevant Issues Concerning Foreign Exchange Management of Overseas Institutional Investors Investing in the Inter-bank Bond Market (Huifa [20 16] 12), and