This article first appeared in The Edge Financial Daily, on March 9, 2016.

KUALA LUMPUR: Malaysia-based institutions can now invest directly in the Chinese capital market using yuan funds, following the issuance by the Malaysian authorities of a guidance note to facilitate applications to the China Securities Regulatory Commission (CSRC).

Jointly issued by Bank Negara Malaysia (BNM) and the Securities Commission Malaysia (SC), the guidance note is to facilitate the process of obtaining a Renminbi Qualified Foreign Institutional Investor (RQFII) licence, which is available now, said BNM in a statement yesterday.

The guidance note outlines the criteria and eligible entities that may apply for the RQFII licence, and additional requirements by the SC and/or BNM prior to any application submission to the CSRC.

The guidance note is pursuant to the People’s Bank of China’s recognition of Malaysia as an RQFII jurisdiction with an aggregate quota of 50 billion yuan on Nov 23 last year.

“With this, Malaysia-based institutions are now able to invest directly in the Chinese capital market using renminbi funds.

“The RQFII programme creates opportunities for qualified Malaysian institutions to offer a wider range of renminbi (yuan) investment products and will serve as an avenue for greater utilisation of offshore renminbi funds,” said BNM.