Anne-Marie Godfrey Quoted in HFMCompliance on Easing of Hong Kong Capital Markets Rules

Anne-Marie Godfrey, a partner in the investment management practice at Akin Gump, has been quoted in the HFMCompliance article “Peking Interest,” which reports on a move in January by the China Securities Regulatory Commission (CSRC) to relax its capital markets rules. By doing so, the article says, the CSRC will allow easier access to foreign investors and institutions, while widening the scope of investment opportunities to include derivatives, bond repurchases and private funds.

According to the article, the CSRC has published draft rules on changes to its Qualified Foreign Institutional Investors (QFII) and RMB Qualified Foreign Institutional Investors (RQFII) regimes that would consolidate the two schemes under a ‘qualified investor’ initiative. As a result, the requirement to raise capital and launch a first fund within six months after private fund manager registration would be eliminated.

Godfrey explained that, under the proposed ‘qualified investor’ regime, foreign allocators would also be allowed to invest in private securities of private funds.

“This change would benefit the wholly or majority foreign-owned private securities investment fund manager business in China as a ‘qualified investor’ or its affiliates would be able to set up a private securities investment fund, assuming they have the relevant authorizations.”

The draft rules would also expand the investment choices of QFIIs and RQFIIs, to which Godfrey explained, “It is proposed that you would be able to invest in China’s OTC board, bond repos, asset-backed securities, futures, commodities futures, options traded on futures exchanges, and foreign exchange derivatives, which weren’t previously permitted.”

Should the proposed changes be implemented, Godfrey thinks, “The list of permitted investments would be expanded to more hedge fund-type assets.”