Regulators in China are considering opening the domestic interest-rate swap market to qualified foreign institutional investors. "There are currently discussions among regulators," saidFang Jian, partner in the China practice at Linklaters in Hong Kong, explaining the discussions follow the relaxation of QFII rules this month.
An onshore fixed income derivatives market kicked off late last year (DW, 11/11) and has been followed up by interbank trades between local and licensed foreign banks.
The new QFII regs, which allow foreign accounts access to the local securities market, reduce the assets under management threshold for foreign institutions investing onshore to USD5 billion from USD10 billion. They also allow sub-accounts for clients of holders in the scheme. "We should see a lot more fund managers entering this market," said Fang. He added while further opening of the swaps market could happen in the coming months, he expects foreign investors to be permitted to trade commodity futures first.
