GF Fund Management, the asset management arm of GF Securities, the country's No4 brokerage, is lobbying the securities regulator to allow it to accept client money in foreign currencies for investment in A-share funds, allowing it to diversify its business as competition in the domestic market heats up.
Chairman Wang Zhiwei said the company was giving priority to obtaining a qualified foreign institutional investor licence. He also said he hoped the China Securities Regulatory Commission would waive rules to support its overseas expansion.
"The regulator has given us a careful hearing, and we hope our lobbying will work," Wang said yesterday. "Some mainland institutions have a long way to go before they can become truly international."
The QFII scheme initially allowed big foreign institutions, such as Goldman Sachs and UBS, to accept foreign-currency funds for conversion into yuan for the purchase of mainland-listed shares.
The offshore subsidiaries of mainland institutions can apply for QFII if they meet the regulatory requirements.
"Some of the QFII rules are unreasonable," Wang said. "We are looking forward to rule changes to enable us to be in this business."
Applicants cannot get a QFII licence unless they have assets of more than US$500 million outside the mainland. Guangzhou-based GF does not meet this requirement.
GF's lobbying follows mainland reforms this year that allowed brokerages, banks, insurers and hedge funds to manage mutual funds.
The CSRC is trying to introduce more institutions to the mutual fund sector as a way of bolstering institutional buying. The policy change is set to eat into the profits of mainland mutual fund companies.
The CSRC is encouraging mainland institutions to go global, in line with Beijing policy. GF has a 1.6 billion yuan (HK$2 billion) renminbi qualified foreign institutional investor quota. Wang said it was not enough for the company's internationalisation drive.
The RQFII programme lets firms in Hong Kong raise offshore yuan funds to invest in mainland shares and bonds.
Separately, GF announced on Wednesday a plan to begin offering a qualified domestic institutional investor fund that tracks the MSCI US Reit Index, giving mainland investors access to the US real estate market.
Under the QDII scheme, institutions can raise yuan on the mainland and convert the funds into foreign currencies to invest in equities abroad.