RQFII quota granted to Luxembourg

Today, the People’s Bank of China has announced the granting of a 50 bn RMB RQFII quota to Luxembourg. The RQFII (RMB Qualified Foreign Institutional Investor) scheme was launched in Hong Kong in 2011 and has been expanded to other jurisdictions since 2013 enabling offshore RMB to be reinvested into the Mainland securities market.

Luxembourg Minister of Finance, Pierre Gramegna, said: “The granting of the RQFII quota again demonstrates China’s recognition of the Luxembourg financial centre as one of Europe’s main hubs for international renminbi business. We are proud to play such a significant role in the process of the internationalisation of the renminbi.”

Luxembourg has made the UCITS a globally recognized brand and more than 67% of UCITS funds distributed internationally are based in Luxembourg. Luxembourg is the largest investment fund centre in the world after the US. The RQFII scheme is particularly useful for fund managers who use Luxembourg as a platform for cross-border distribution. Major international and Chinese fund promoters had already set up RQFII funds through Luxembourg domiciled vehicles, using other jurisdictions’ quotas. Luxembourg’s European and global investor base will now be able to use the RQFII scheme directly to invest up to 50 bn RMB on the Chinese capital market.

Together with the designation of ICBC as RMB clearing bank in Luxembourg, the RQFII quota consolidates Luxembourg’s prominent position as a leading RMB hub in Europe.

Luxembourg ranks first in Europe when it comes to RMB deposits (61,5 bn RMB), loans (61,1 bn RMB) and RMB in investment funds (296,3 bn, all figures H2 2014). The Luxembourg Stock Exchange is also the exchange with most Dim Sum bonds listed in Europe (45 in H2 2014). With a market share of 12% of global Dim Sum bond listings, it ranks third behind Hong Kong and Singapore.