Shanghai/Hong Kong – Citibank (China) Co., Ltd. (“Citi China”) announced today that its Direct Custody & Clearing (DCC) business has completed the a series of securities lending transactions in the China A-share market as the custodian for a prominent global client under the Qualified Foreign Institutional Investors (QFII) scheme. This announcement makes Citi one of the first custodian banks in China to support the expanded QFII investment scope (including securities lending, margin trading and securities financing, financial and commodity futures, options, private funds) under the new QFII regulation which became effective November 1, 2020.
David Russell, Citi’s APAC Head of Securities Services and Hong Kong Head of Markets, said: “We are pleased to have implemented the securities lending transactions as a custodian on the first trading day when the new QFII regulation became effective. The strength of our DCC business is our ability to deliver local expertise and innovation to our global clients, and this transaction exemplifies that. Our in-depth understanding of the market, client-centric mindset, close relationships with local regulators and market infrastructures have reinforced Citi’s leading position in China. The relaxed QFII regulation provides exciting new ways for global investors to participate in China’s capital markets. Citi is well positioned to help them navigate and capitalize these tremendous opportunities.”
“We are busy helping a wave of new foreign investors to apply for their QFII qualifications, including more successful applications for qualified hedge funds and private equity funds. Recently we helped a quantitative hedge fund to get its QFII approval, the first of its kind in QFII’s history and another testimony of further China opening-up”, commented by Ji Yang, Citi’s China Head of Markets and Securities Services. “With this new QFII regulation, we expect that global brokers and hedge funds can finally play an active role in China’s A-share margin trading and securities financing, while private equity funds can enjoy a low-cost channel to invest in onshore companies with flexible repatriation, and asset owners / asset managers can lend out their securities for higher portfolio yield.”
Citi was among the first banks to receive approval from China regulators in 2003 to act as a QFII custodian. In subsequent years, Citi obtained the Bond Settlement Agent (BSA) license and the Futures Margin Depositary Bank (FMDB) license. Recently Citi obtained the domestic fund custody license, a significant milestone enabling it to service onshore mutual funds and private funds, including the PFM (“private fund managers”) funds, which is now under the permitted investment scope of QFII. Citi’s full custody and settlement related licenses and capabilities in China distinguish itself among its international rivals; together with its Hong Kong custody, agency securities lending, and prime finance capabilities in Stock Connect and China A-share structured products, Citi is able to deliver a complete front-to-back China access solution to its global clients.
The QFII program provides global investors with direct access to China’s capital markets, and was originally launched in 2003; the RQFII program was launched in 2010 and the Stock Connect program was launched in 2014. The QFII program has evolved over the years and the latest developments in 2020 included the removal of investment quota restriction by SAFE and the announcement of new QFII regulation by CSRC. The new QFII regulation made significant amendments to the previous regime, including unifying QFII and RQFII schemes, expanding permissible investment scope, as well as streamlining the application and review procedures, overall offering a more convenient and flexible framework for foreign investments in China’s capital markets.
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
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Citi first established an office in China on May 15, 1902, in Shanghai. In April 2007, Citi was among the first international banks to locally incorporate in China. Citi's locally incorporated entity is known as Citibank (China) Co., Ltd., which is wholly owned by Citibank, N.A.. Today Citi’s footprint in China is across twelve cities. With operations in more than 160 countries and jurisdictions around the world, Citi is the most global of all international banks in China. Additional information may be found at www.citibank.com.cn and www.citi.com.cn.