HSBC has facilitated short selling transactions by an offshore investor via the Qualified Foreign Institutional Investors (QFII) scheme.
QFII is a programme that allows specified licensed international investors to participate in mainland China's stock exchanges.
The first short selling transactions took place on 29 December marking the first time offshore investors could participate in margin financing and short selling (MF&SS) transactions on the Shanghai and Shenzhen stock exchanges.
The new QFII/RQFII rules came into effect on 1 November 2020 and have caused the investment scope for offshore investors to expand.
It now includes investment in private funds lawfully founded by a securities or futures institution, or by a private fund manager registered at Asset Management Association of China.
The new rules have also lowered entry requirements and simplified procedures under the combined quota-free QFII and RQFII.
HSBC has also facilitated the first onshore private fund investment via the QFII/RQFII scheme in mainland China.
According to Stephen Pemberton, global head of product, banks and broker dealers, securities services at HSBC, since the rollout of new QFII rules, HSBC has worked with its clients, and market participants, to prepare for the opportunities they will generate.
“We designed a robust, streamlined MF&SS solution for clients, enabling them to consume normalised securities transaction data, and allowing us once again to deliver market-first services,” said Pemberton.
Pemberton highlighted: “MF&SS is an important securities trading mechanism, helping to activate trading and drive market price discovery. Since the inception of MF&SS in the China A-share market it has evolved to support further scale and growth. The opening of MF&SS business through QFII/RQFII enables offshore investors to diversify their trading strategies, further boosting inbound investment flows to the China securities market.”
“With continued investment in new technology, HSBC is committed to rolling out innovative and valuable products, providing best-in-class client service, and playing an active role in the continued opening up of China’s capital markets,” added Pemberton.
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