Standard Chartered China supports first stock borrowing deal by QFII

On December 29, 2020, Standard Chartered Bank (China) Limited (Standard Chartered China), took the lead as a custodian bank in assisting a large overseas institutional investor to complete a stock borrowing deal in the A-share market, which includes the Main Board, Growth Enterprise Market and STAR Market, on the first day of the Qualified Foreign Institutional Investors (QFII) / RMB Qualified Foreign Institutional Investors (RQFII) stock borrowing trading in the Shanghai and Shenzhen markets. This also marks the first stock borrowing deal by QFII in the market, following the release of the “Measures for the Administration of Domestic Securities and Futures Investment by Qualified Foreign Institutional Investors and RMB Qualified Foreign Institutional Investors” by regulators.

At the end of September 2020, the total market value of A shares held by QFII / RQFII is around RMB1957 billion . As QFII investors tend to have rich experience and prefer mature and diverse investment strategies, their participation in stock borrowing helps expand the scale of the markets, improve the trading engagement, refine the long-short balance mechanism, and further enhance the internationalisation of China’s capital market. The initiative is of great significance to further develop the country’s financial system.

Rick Hu, Head of Securities Services at Standard Chartered China, said: “The latest regulatory relaxations offer more investment instruments to QFII, among which the stock borrowing and lending businesses have always been the most attractive ones that are frequently inquired by many overseas institutional investors. Standard Chartered China has been actively cooperating with the depositories and securities companies from the very beginning, studying the trading and settlement mechanism, designing the processes and testing the systems, and accordingly preparing the interested clients with both knowledge and setup. We are pleased to have played a key role in our client’s successfully completion of the first stock borrowing deal, and will continue to introduce and serve overseas institutional investors to contribute to the interconnection of domestic and foreign capital markets.”

Standard Chartered started its custodial business in China’s capital market from as early as 1992 and became one of the first QFII custodian banks in 2003. In 2018, Standard Chartered China was the first and only foreign bank in China who was granted the domestic fund custody licence, making Standard Chartered China one of the international banks with the most complete custody licenses as well as the most extensive live custodial offerings in China.

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