Foreign Institutional Investors Investing in Inter-bank Bond Market Fund Regulated

Lately, to normalize the foreign exchange management for foreign institutional investors investing in the inter-bank bond market, the State Administration of Foreign Exchange has issued the Circular of the State Administration of Foreign Exchange on Foreign Exchange Management Issues on Foreign Institutional Investors Investing in the Inter-bank Bond Market (the "Circular") which shall come into force on the date of promulgation.

Main ideas of the Circular include the following. Firstly, it is to implement registration management for foreign institutional investors. Foreign institutional investors shall apply for exchange registration via settlement agents. The second point is to stipulate the scope of income and expenditure of the specific foreign exchange account, which is open for the foreign institutional investors. Third, the currency of the repatriation and remitting of funds is required to be almost the same. Despite of the initial repatriation fund, the proportion of domestic currency and foreign currency in investors' repatriation funds shall stay the same as that in investors' remitting funds, with less than 10% fluctuation. And the amount of foreign currency or domestic currency in the initial repatriation fund shall not exceed 110% of the accumulative total amount.

The Circular is conductive to raise the initiatives of foreign investors and promotes the opening up of inter-bank bond market

(Source:http://www.safe.gov.cn/resources/wcmpages//wps/wcm/connect/safe_web_store/safe_web/zcfg/zbxmwhgl/jwrzyyjzjgl/node_zcfg_zbxm_kjzwtz_store/168828804cea1e898631bf208dd2212f/)