(12 June 2015 – Australia) HSBC is acting as custodian to support Australia’s first Renminbi Qualified Foreign Institutional Investor (RQFII) in China.
The deal, the largest initial RQFII quota globally at RMB10 billion (A$2 billion), also involves exposure to China A-shares through Vanguard’s Emerging Markets Stock Index Fund.
In November 2014, Australia was allocated an RQFII quota of RMB50 billion.
As the onshore custodian bank in China, HSBC facilitated Vanguard’s application for the first RQFII Australian license.
Vanguard’s inclusion of China A-shares in its Emerging Markets Stock Index Fund coincides with FTSE Russell’s decision to include China A-shares into one of its two transitional indices.
FTSE’s move is part of a wider plan to increase their China A-share Emerging Market Indices weighting from 5 percent to 32 percent as RQFII quotas expand – with the ultimate goal being inclusion in the key benchmark.
Andrew Bastow, head of Securities Services, Australia for HSBC said: “HSBC is delighted to have been appointed the custodian bank for the first RQFII deal out of Australia and the largest initial RQFII quota globally.
“This milestone deal also reinforces the strategic importance of the Australia-China bilateral relationship as well as Australia’s commitment to driving RMB internationalisation.”
Patrick Wong, head of China Sales and Business Development, Securities Services, HSBC, said: “The size of the quota granted to Vanguard is further evidence of China’s commitment to accelerating its financial reforms by granting investors greater access to its markets.
“This has come at a very exciting time for us and the region as FTSE Russell has announced a clear roadmap to include China A-shares into their Indices and we can facilitate institutional investors to access China when they track the Indices.”
As of 29 May 2015, HSBC was the custodian bank for US$24.858 billion (A$32.01 billion) of investment quota for QFIIs, which was equivalent to 33.38 percent of the total amount approved , the largest market share among all banks.
It was also the custodian bank for RMB175.1 billion of investment quota for RQFIIs, which was equivalent to 45.76 percent of the total amount approved.
HSBC offers foreign institutional investors a wide range of services in China, including custody services, clearing and settlement of securities trading, interbank bond settlement and clearing, agency services and futures margin depository services.