New Regulations to Give Foreign Traders Greater Access to China's A-shares

Foreign strategic investors and foreigners who invest in China's B-share market will be given permission to open securities accounts and thus trade on China's A-share market, if draft regulations announced this week are introduced.

China Securities Regulatory Commission (CSRC), China's securities watchdog, issued a document soliciting public comment on the revisions to existing securities registration and settlement management regulations on Tuesday. The deadline for public comment is October 28, 2009.

The draft revisions to the regulations expand and clarify what kind of individuals and groups are permitted to trade in the Chinese equity markets.

Currently, regulations simply state that "Chinese citizens and Chinese legal entities" are the only entities permitted to open securities accounts.

The new draft regulations will expand the definition of qualified securities investment entities to include "Chinese citizens, Chinese legal entities, Chinese partnership enterprises and other investors prescribed by Chinese laws, administrative regulations and rules from the CSRC."

According to a CSRC official, if the revisions are adopted, Chinese partnership enterprises, QFII (Qualified Foreign Institutional Investors), foreign strategic investors, foreigners who invest in Chinese B-share market, citizens and legal entities of Hong Kong, Macao and Taiwan as well as venture capital businesses will be able to register as market participants and trade in China's domestic stock markets.

The country's Shanghai Composite Index rose 34.34 points, or 1.17 percent, to end at 2,970.53 on October 14.

Links and Sources
China Securities Regulatory Commission: Draft Regulations