UPDATE 1-China proposes increasing QFII investment in firms
* QFII stake cap in companies may be raised to 30 pct from 20 pct
* China wants to attract more QFII investments (Updates prices; adds quotes, details)
By Samuel Shen and Carrie Ho
SHANGHAI, June 21 (Reuters) - China's securities regulator has proposed a 50 percent increase in size of the total stake that approved foreign investors can hold in listed companies, the latest in a series of steps intended to attract more investment in the country's capital markets.
In a draft document released on Wednesday evening, the China Securities Regulatory Commission (CSRC) said it was looking at increasing the cap on the combined stake in a listed company held by Qualified Foreign Institutional Investors (QFII) to 30 percent from 20 percent.
The CSRC also plans to lower the requirements for QFII investors, and will allow them to invest in China's interbank market for the first time, according to the draft rules.
The CSRC is seeking feedback on the proposal. Generally, its draft regulations are considered to have a good chance of being implemented.
The country has been stepping up efforts to expand the QFII programme, which it launched in 2003 to allow foreign investors to buy Chinese securities, and officials have vowed to speed up approval procedures.
Earlier this year, the government raised the total maximum QFII quota by $50 billion to $80 billion. Under the QFII programme, an investor is given a licence and an investment quota by regulators.
As of April 16, China had granted QFII licences to 170 investors, and 129 of them had obtained combined quotas of $25.19 billion from the country's foreign exchange regulator.
The State Administration of Foreign Exchange (SAFE) had said it will adopt fast-track procedures and allocate more quotas to foreign investors such as pension funds, government-linked funds and insurers.
According to the draft rules, long-term foreign investors including insurers, asset managers, pension and sovereign wealth funds will be required to have at least two years of operations and $500 million in securities assets to apply for a QFII licence. Previously, the threshold was five years of operation and $5 billion in assets.
The Chinese government has been exploring ways of speeding up the pace of financial reform to bring the country closer to the goal of a basically convertible yuan by 2015, sources in contact with the People's Bank of China and the China Securities Regulatory Commission told Reuters in April. (Editing by John Mair)
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