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 PBC and SAFE Issue Provisions on Administration of Funds Invested by Overseas Institutional Investors in China's Bond Market
Category:Legislative Updates  
Subject:Foreign investment  
Keywords:investment of overseas institutions;  bond market;  administrative provisions on funds
Publish Date:11-24-2022
Recently, the People's Bank of China (PBC) and the State Administration of Foreign Exchange (SAFE) jointly issued the Provisions on the Administration of Funds Invested by Overseas Institutional Investors in China's Bond Market, effective from January 1, 2023.
First, the Provisions set out a series of unified and standardized management rules for fund accounts, fund receipts, payments and remittance, as well as statistical monitoring of funds invested by overseas institutional investors in China's bond market. Second, the management of spot foreign exchange settlement and sale transactions is improved. Overseas institutional investors are allowed to conduct relevant transactions through third-party financial institutions except for settlement agents. Third, the Provisions optimize policies on foreign exchange risk management, and further expand channels of foreign exchange hedging for foreign institutional investors, with restrictions on the number of counterparties in OTC trading cancelled. Fourth, the Provisions call for optimizing the management of currency matching for foreign exchange, enhancing the convenience of remittance of investment funds by overseas institutional investors, and encouraging long-term investments in China's bond market. Fifth, management requirements for sovereign institutions are clarified. Sovereign investment institutions which invest through custodians or settlement agents (commercial banks) are required to register with banks.
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