In accordance with the Regulations of the People's Republic of China on Foreign Exchange Administration and the Announcement No. 8 [2013] of the People's Bank of China, this is to notify relevant issues regarding further facilitating investments by foreign institutional investors in domestic interbank bond markets.

I. The same foreign institutional investor may, based on its own investment management need, conduct two-way non-trading transfers between the inter-bank bonds in its bonds account invested through the Qualified Foreign Institutional Investor (QFII) program or the RMB Qualified Foreign Institutional Investor (RQFII) program (collectively known as QFII/RQFII) and those in the bonds account invested directly in the inter-bank bonds market.

(1) Foreign institutional investors shall apply to China Central Depository & Clearing Co., Ltd. or Shanghai Clearing House (collectively known as depositary, custodian and settlement institutions) via their domestic QFII/RQFII custodian banks or settlement agents for direct investments for non-trading transfers of the bonds they have bought from domestic interbank bond markets.

For the required materials and relevant processes, please follow the business guidelines released by the depositary, custodian and settlement institutions.

(2) Subsequent transactions and exchanges after the transfer shall follow relevant management requirements of subsequent channels.

(3) The depositary, custodian and settlement institutions shall regularly report non-trading transfers to the People's Bank of China.

II. Funds in the same foreign institutional investor's QFII/RQFII custodian account and those in its direct investment account could be transferred in two ways directly within China.

(1) The foreign institutional investor shall apply to its domestic QFII/RQFII custodian bank for transferring the fund from QFII/RQFII custody account to its direct investment account, or apply to its settlement agents for direct investment for transferring the fund from its direct investment account to its QFII/RQFII custody account.

(2) Upon completion of the fund transfer between QFII/RQFII and direct investment channels, subsequent transactions and exchanges shall follow relevant management requirements of subsequent channels.

III. In accordance with this circular and their own responsibilities, domestic custodian banks and settlement agents shall provide services relating to non-trading transfers and fund transfers, data reporting and monitoring with regard to the bonds bought by foreign institutional investors.

The domestic custodian banks and settlement agents shall report the fund transfers by foreign institutional investors to the RMB cross-border receipts and payments information management system, in accordance with the Management Measures for the RMB Cross-border Receipts and Payments Information Management System (Yinfa No. 126 [2017]), and the Circular of the General office of the People's Bank of China on Refining the Interbank Business Data Reporting Processes in the RMB Cross-border Receipts and Payments Information Management System (Yinbanfa No. 118 [2017]).

IV. Investments in domestic inter-bank bonds market made by the same foreign institutional investor through the QFII/RQFII and direct divestment channels will be filed only once with the People's Bank of China Shanghai Head Office via the investor's domestic QFII/RQFII custodian bank or settlement agent for direct investment.

V. Foreign central banks, international financial organizations, sovereign wealth funds shall also follow this circular for such non-trading transfers and domestic fund transfers for bonds between QFII/RQFII and direct investment channels.

VI. If a foreign institutional investor opens an account under the name of the products it manages, the products shall be the same non-legal-person products.

VII. This circular will become effective as of November 15, 2019. In case of any inconsistency between existing regulations and this circular, this circular shall prevail.

The People's Bank of China, State Administration of Foreign Exchange

September 30, 2019