Financial Services Commission Allows Domestic Registration of China ETFs... Investment Possible as Early as Year-End
[Asia Economy Reporter Ji-hwan Park] The path to invest in China-listed Exchange Traded Funds (ETFs) through domestic exchanges is opening. Since the registration review for foreign funds generally takes 4 to 6 months, investment is expected to be possible as early as the end of the year.
On the 25th, the Financial Services Commission approved amendments to the Financial Investment Business Regulations to allow the registration of Chinese ETFs domestically. This follows revisions to the Enforcement Rules of the Capital Markets Act and the Financial Investment Business Regulations. The revised Enforcement Rules and Financial Investment Business Regulations will take effect on the 27th.
Earlier, the Korea Exchange and the Shanghai Stock Exchange signed a Memorandum of Understanding (MOU) in May. The two exchanges plan to promote ETF cross-listing. Cross-listing refers to listing domestic ETFs that invest 100% in the counterpart country's ETFs. If a Korean ETF investing 100% in Chinese ETFs is listed on the Korean stock market, it will have the effect of listing the Chinese ETF domestically.
After signing the MOU, the two exchanges agreed to promote linkage projects between the two countries' capital markets, starting with the ETF market, indices, and bond business sectors. They also prioritized ETF cross-listing and joint index development as initial tasks and committed to achieving concrete results within the year.
However, under current laws, only foreign collective investment schemes established in OECD member countries, Hong Kong, and Singapore can be registered for domestic sales, so additional legal amendments were necessary.
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A Financial Services Commission official stated, "Some asset management companies are currently promoting cross-listing of Chinese ETFs," adding, "We expect this to expand overseas investment opportunities for our citizens."
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