China's securities regulator yesterday confirmed the creation of a more level playing field for qualified foreign institutional investors (QFII).

A circular released by the China Securities Regulatory Commission (CSRC) revealed that QFII can now get wider access to the domestic securities market, besides listed A shares and bonds.

They can also invest in closed-end and open-end funds, with no investment ratio limits. They will also be able to buy into initial public offerings, additional share issues, rights shares and convertible bonds, said the circular published on the CSRC website.

The move followed recent market speculation that the QFII investment sphere would be extended.

China issued detailed regulations on the QFII scheme last November, which went into effect in December as a transitional measure to open up the securities market when the renminbi is still not fully convertible under the capital account.

The rules defined that foreign investors that match relative qualifications can invest in A shares listed in Shanghai and Shenzhen stock markets, treasury and corporate bonds and "other financial tools approved by the Chinese authorities," but did not elaborate on the final part.

So far, China has approved five domestic banks and three foreign banks as QFII custodians, which would enable QFII to set up special accounts and remit money to invest in currently domestic A shares, funds and bonds.

A number of foreign institutions are working on their applications to the CSRC, including Deutsche Bank, UBS Warburg and Goldman Sachs.

Some have already handed in their initial proposals and are now finalizing their deals with the custodians.

(China Daily March 20, 2003)