The Association of the Luxembourg Fund Industry (ALFI) has published Frequently Asked Questions to provide general guidance to Luxembourg investment funds and their management companies wishing to apply for an RQFII Licence and an RQFII Quota.
The publication of these FAQs follows the announcement by the People’s Bank of China on 29 April 2015 granting a RMB50 billion Qualified Foreign Institutional Investor (RQFII) quota to Luxembourg. The RQFII scheme was launched in Hong Kong in 2011 and has been expanded to other jurisdictions since 2013, allowing an increased volume of offshore RMB to be reinvested into the Mainland securities markets.
Denise Voss (pictured), Chairman of ALFI, says: “Luxembourg has been a pioneer in the internationalisation of the RMB and it has become the leading RMB investment fund centre. It was the first country to authorise an RQFII UCITS in 2013 as well as the first country to authorise a UCITS to invest through the Shanghai Hong Kong Stock Connect.
“Major international and PRC-headquartered asset managers have already set up Luxembourg domiciled investment vehicles using the quota of other jurisdictions. We are thrilled with the opportunity to further enlarge our access to the Chinese capital markets.
“These FAQs should prove extremely useful to all those involved in the practical implementation of the RQFII scheme directly from Luxembourg”.
Marc-André Bechet, Director of Legal & Tax Affairs at ALFI, adds: “The publication of these FAQs follows a period of intense consultation within the investment funds community in Luxembourg and with the Supervisory Authorities in Mainland China.
“The aim of the FAQs is to facilitate the preparation of application files for Luxembourg investment funds and their management companies and to anticipate the requirements of the Supervisory Authorities. We spent a great amount of time going through the requirements of Mainland China regulations and analysing which types of Luxembourg investment fund structures would be eligible for an RQFII licence and an RQFII quota”.
Nicolas Mackel, CEO of Luxembourg for Finance concludes: "The implementation of the RQFII quota allocated to Luxembourg will add to the role Luxembourg is already playing as one of the leading hubs for the internationalisation of the Chinese currency in Europe and offer Luxembourg's European and global investor community additional options for tapping opportunities in China."