The Association of the Luxembourg Fund Industry (ALFI) yesterday released the publication of Frequently Asked Questions (FAQs) which will provide general guidance to Luxembourg investent funds and their management companies wishing to apply for an RGFII Licence and an RQFII Quota.
The publication of these FAQs followed the announcement made in April earlier this year by the People's Bank of China that it would be granting a RMB 50 billion Qualified Foreign Institutional Investor ('RFQII') quota to Luxembourg. The RFQII scheme was launched in 2011 in Hong Kong and has allowed an increased volume of offshore RMB to be reinvested into the Mainland securities markets since it began to expand to other jurisdictions in 2013.
"Luxembourg has been a pioneer in the internationalisation of the RMB and it has become the leading RMB investment fund centre," explained Denise Voss, Chairman of ALFI. "It was the first country to authorise an RGFII UCITS in 2013 as well as the first country to authorise a UCITS to invest through the Shanghai Hong Kong Stock Connect".
Speaking of the decision to release the FAQs, she continued: "Major international and PRC-headquartered asset managers have already set up Luxembourg domiciled investment vehicles using the quota of other jurisdictions. We are thrilled with the opportunity to further enlarge our access to the Chinese capital markets. These FAQs should prove extremely useful to all those involved in the practical implementation of the RQFII scheme directly from Luxembourg".
"The publication of these FAQs follows a period of intense consultation within the investment funds community in Luxembourg and with the Supervisory Authorities in Mainland China," added Marc-André Bechet, Director of Legal & Tax Affairs at ALFI. "The aim of the FAQs is to facilitate the preparation of application files for Luxembourg investment funds and their management companies and to anticipate the requirements of the Supervisory Authorities. We spent a great amount of time going through the requirements of Mainland China regulations and analysing which types of Luxembourg investment fund structures would be eligible for a RFQII licence and an RFQII quota".
Nicolas Mackel, CEO of Luxembourg for Finance, concoluded: "The implementation of the RFQII quota allocated to Luxembourg will add to the role Luxembourg is already playing as one of the leading hubs for the internationalisation of the Chinese currency in Europe and offer Luxembourg's European and global investor community additional options for tapping opportunities in China".
These FAQs are available in English and Mandarin from www.alfi.lu
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