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Custody Service for QFII

I. Product Overview
QFII (Qualified Foreign Institutional Investors) system is an important move adopted by the Chinese Government to attract foreign investment by limited liberalization of its capital market under the circumstances of foreign exchange control and incompletely free convertibility of RMB in China. At of the end of 2002, the issue of Provisional Administrative Measures on Domestic Securities Investments of Qualified Foreign Institutional Investors (QFII) signified the formal introduction of QFII system into China. On September 1, 2006, the revised Administrative Measures on Domestic Securities Investments of Qualified Foreign Institutional Investors (QFII) came into effect. The new measures specify that qualified investors should entrust a domestic commercial bank as their custodians to manage their investments.

II. Target Customers
According to the Administrative Measures on Domestic Securities Investments of Qualified Foreign Institutional Investors (QFII), ICBC can provide QFII custody services for:
i. Overseas fund management companies;
ii. Overseas insurance companies;
iii. Overseas securities companies;
iv. Overseas commercial banks;
v. Overseas pension funds, charity funds, endowment funds, trust companies, government investment management companies and other institutional investors;
vi. Other qualified overseas institutions which meet regulatory requirements.

III. Scope of Services
i. Basic services
(1) Agency service: application for QFII qualification, investment quota, opening of foreign exchange account, special RMB account and securities account, and proxy voting etc.;
(2) Safekeeping: provide asset custody service for QFII customers;
(3) Settlement of transaction: complete securities delivery and clearing for domestic investments of QFII customers;
(4) Accounting: record QFII investment activities in the account books;
(5) Asset valuation: valuate QFII investment assets according to international accounting standards;
(6) Company information: provide the information about QFII securities holdings and financial market news;
(7) Transaction supervision: supervise shareholding ratio according to QFII portfolios and regulatory requirements;
(8) Foreign exchange conversion: currency conversion, and foreign exchange settlement and sales;
(9) Record keeping: properly keep the records on investment and fund inflows/outflows and other materials;
(10) Other services: other services required by regulators.
ii. Value-added service
(1) Performance evaluation: performance estimation and evaluation for QFII portfolios;
(2) Risk management: QFII investment risk warning and risk assessment report;
(3) Cash management: multiple cash management instruments for QFII customers;
(4) Electronic banking: uploading and downloading of electronic banking data;
(5) Tax agency: Declare and pay taxes for QFII customers as an agent;
(6) Customized reports: provide reports in customized types and formats;
(7) Other services: other customised requests proposed by QFII customers.

IV. Advantages
ICBC was one of the earliest banks providing QFII custody services in China. Due to its familiarity with China’s securities market policies and QFII system, the Bank has helped a large number of customers successfully expand their business in Chinese market.
As the largest custodian bank in China, ICBC has maintained its leading position in the market for 18 consecutive years in terms of market share of asset custody business.
It is also the most professional custodian bank in China, with an advanced custody service system independently developed by it. The system has obtained ISAE3402 authentication (formerly known as SAS70), the first one of its kind in China, indicating that ICBC’s custody services have met international standards.
ICBC, the most powerful domestic commercial bank, owns a fast clearing network, abundant RMB funds and strong A share settlement capability, hence it can provide QFII customers with efficient and comprehensive service support.

V. Flow Chart

VI. Contact Information
If you would like to apply for any service, please contact the Global Asset Custody Division of Asset Custody Department of ICBC:
Liaison: Jia Wenhui, Chang Yue, Fan Mei, Feng Peini, Sun Yang, Wang Qiu, Wang Zhongwei
Tel.: (8610)66105757/5756/5700/5753/5754/5755/81013751
Fax: (8610)66105753
E-MAIL: wenhui.jia@icbc.com.cn