In accordance with the Regulations of the People’s Republic of China on Foreign Exchange Administration, the Announcement of the People’s Bank of China No.8 [2013] and other relevant regulations, the People’s Bank of China (PBC) and the State Administration of Foreign Exchange hereby notify the following issues concerning further facilitating investments of overseas institutional investors in China’s interbank bond market:

I. An overseas institutional investor can conduct two-way non-transactional transfers of its interbank market bond holdings between its bond account under the Qualified Foreign Institutional Investor (QFII) or RMB Qualified Foreign Institutional Investor (RQFII) item (hereinafter jointly referred to as “QFII/RQFII”) and its bond account under the item of direct investment in the interbank market (hereinafter referred to as “direct investment”) based on its investment management needs.

(1) An overseas institutional investor shall submit applications for non-transactional transfers of its interbank market bond holdings to the China Central Depository & Clearing Co., Ltd. or the Shanghai Clearing House (hereinafter jointly referred to as “bond registration, custody and settlement institutions”) through its domestic QFII/RQFII custodian bank or its settlement agent for direct investment.

Submissions required for non-transactional transfer application and procedures to follow shall be specified in the related guidance issued by bond registration, custody and settlement institutions.

(2) After any non-transactional transfer of bonds between channels of QFII/RQFII and direct investment is completed, the subsequent transactions and fund remittance shall follow management requirements of corresponding channels.

(3) Bond registration, custody and settlement institutions shall report non-transactional transfers regularly to the PBC.

II. Two-way fund transfers can be conducted directly and domestically between the QFII/RQFII custodian account and the direct investment fund account opened by the same overseas investor.

(1) An overseas investor shall apply to its domestic QFII/RQFII custodian bank for fund transfers from the QFII/RQFII custodian account to the direct investment account, or apply to its direct investment settlement agent for fund transfers from the direct investment account to the QFII/RQFII custodian account.

(2) After any transfer of funds between channels of QFII/RQFII and direct investment is completed, the subsequent transactions and fund remittance shall follow management requirements concerning corresponding channels.

III. Domestic custodian banks and settlement agents shall do their duties to provide non-transactional bond transfer and fund transfer services for overseas institutional investors and carry out data submission and monitoring in line with the Notice.

Domestic custodian banks and settlement agents shall submit information on fund transfers of overseas institutional investors to the RMB Cross-border Payment and Receipt Management Information System in accordance with the Measures for the Administration of the RMB Cross-border Payment and Receipt Management Information System (Yinfa No.126 [2017]), the Notice of the General Office of the People's Bank of China on Improving Interbank Business Data Submission Procedures of the RMB Cross-border Payment and Receipt Management Information System (Yinbanfa No.118 [2017]) and other relevant regulations.

IV. An overseas institutional investor who invests in China’s interbank bond market via both QFII/RQFII and direct investment channels shall need to file with the PBC Shanghai Head Office only once either through the domestic QFII/RQFII custodian bank or the settlement agent for direct investment.

V. The Notice is applicable to non-transactional bond transfers and domestic fund transfers between channels of QFII/RQFII and direct investment by foreign central banks, international financial organizations and sovereign wealth funds.

VI. Where an overseas institution opens an account in the name of a product it manages, the accounts should be related to the same non-legal person product.

VII. The Notice shall come into effect from November 15th, 2019. In case of any inconsistency between existing regulations and the Notice, the Notice shall prevail.

People’s Bank of China, State Administration of Foreign Exchange

September 30, 2019