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China to remove limits on overseas funds in domestic stock, bond markets

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China to remove limits on overseas funds in domestic stock, bond markets

China will scrap the limit on overseas funds buying domestic stocks and bonds as the world's second-largest economy continues opening its financial markets to foreign investors.

Under the proposal, foreign institutional investors will no longer be required to apply for quotas before purchasing stocks, bonds and other financial instruments listed on the country's stock exchanges in Shanghai and Shenzhen, the State Administration of Foreign Exchange, or SAFE, said Sept. 10.

"The convenience of foreign investors to participate in the domestic financial market will be greatly improved again, and China's bond and stock market will be better and more widely accepted by the international market," the SAFE said in the statement.

It did not say when the new rule will become effective.

Overseas funds trade onshore stocks and bonds via two programs: the Qualified Foreign Institutional Investor, or QFII, and the Renminbi Qualified Foreign Institutional Investor, or RQFII.

The quota policy was last revised in January when the SAFE doubled the combined quotas of QFII and RQFII to US$300 billion from US$150 billion.

China has been relaxing rules on the two quota programs in recent years as it gradually opens the capital markets to foreign participation, such as removing the remittance limit for the investors in June 2018.