when the csrc first launched the qfii program in 2002 it mandated that certain prerequisites had to be met for investors to be accepted into the program the csrc determined these qualifications by the type of institutional investor who applied for a license such as a fund management company or insurance business 1
for example fund management companies had to have at least five years of asset management experience and at least 5 billion of assets under management during the most recent accounting year a certain amount of foreign currency transferred and converted to local currency was also mandatory for approval starting in 2016 the csrc began a series of reforms to the qfii program with the goal of attracting more foreign capital the csrc began to loosen investor qualifications for the qffi program in 2019 the csrc announced simplified rules that removed the assets under management aum criteria and years of experience needed by foreign investors qfii vs rqfiiin dec 2011 the csrc started the renminbi qualified foreign institutional investor rqfii program similar to the qfii program the rqfii program allows foreign investors the opportunity to invest in china s stock exchanges there are differences between the rqfii program and the qfii program most of which have to do with easing restrictions on investors that made accessing the qfii program difficult for example qfii program participants must convert their foreign currency into renminbi before investing in chinese securities rqfii participants however do not need to convert their currency and can invest directly in china s domestic capital markets 3special considerationsprior to june 2018 foreign institutions invested in china s stock or bond markets through the qfii program could only repatriate up to 20 of its investments every month also each time a qfii participant sought to move money out of china for the first time they were prevented from doing so by a three month lock up restriction however that has now changed 4as of mid june 2018 china lifted both the 20 remittance ceiling and the three month lock up period for all new and existing qfii participants as an added incentive china allows qfiis to perform hedging to manage foreign exchange risks 5these new rules along with the lifting of quota restrictions are seen as china s attempts to make trading in their bond and stock markets more widely accepted among international investors in 2019 china s securities regulator announced plans to eventually combine the qfii and rqfii programs as part of its reforms to increase foreign investor participation 2