MAS Licensing Open for RNQFII Program to Invest Offshore-RMB in China's Stock Markets

Following the positive discussion between China and Singapore regarding the Renminbi Qualified Foreign Institutional Investor (RNQFII) program that will enable firms to offer RMB investment products and investor into China’s stock markets, the Monetary Authority of Singapore (MAS) has today opened its doors to RNQFII license applications.

As announced previously, Singapore was allocated an aggregate quota of RMB50 billion under China’s RQFII programme. The introduction of the RQFII scheme in Singapore is expected to play a key role in developing a vibrant RMB eco-system there, as noted in the press release. The program is expected to spark the creation of a wider range of RMB products and services to meet investment needs. This follows a similar deal struck with the United Kingdom, for the China-based program.

The applications will be made to China’s financial market regulator, the China Securities Regulatory Commission (CSRC) via approved custodian banks, according to the MAS issued press release. According to the CSRC website, there are 16 approved custodian banks, dated as of June 2012).

MAS Application first for Confirm, Then CSRC Application via Bank

While the licensing will be via China's regulator, eligible firms must first complete a form with MAS to get "confirmed" as CSRC will need the confirmation first from MAS on the eligible entities that could qualify under the programme. This includes MAS providing a 3-year regulatory history for each firm to CSRC, as part of the process.

In addition, the announcement described how Singapore-incorporate financial institutions that are approved by MAS to conduct fund management may apply for licenses, including registered and licensed fund management companies, as well as banks and insurance companies which are exempt from the requirement to hold a Capital Markets Services Licence under Section 99 (1)(a), (b), (c) and (d).

For details relating to the application process, please refer to the “Renminbi Qualified Foreign Institutional Investor (RQFII) FAQ” on MAS’ website.

According to the link on the Chinese Regulator's website, the CSRC-approved custodian banks in China that Singapore-domiciled MAS members can apply include:

QFII Custodian Banks

• HSBC Bank(China) Company Limited
• CitiBank(China) Company Limited
• Standard Chartered Bank(China) Company Limited
• Industrial & Commercial Bank of China
• Bank of China
• Agricultural Bank of China
• Bank of Communications
• China Construction Bank
• China Everbright Bank
• China Merchants Bank
• Deutsche Bank(China) Company Limited
• DBS Bank
• China Citic Bank
• Shanghai Pudong Development Bank Co.,Ltd.
• China Minsheng Bandkingcorp.,Ltd.
• Bank of Tokyo-Mitsubishi UFJ (China)

The deal is expected to have positive benefits, according to the outlook of the MAS, and follows widespread attention that China's currency (both on-shore and off-shore) has had in the last year, as its monetary policy shifts and the RMB gains in its FX market share and allure of investors and speculators.