Secondary market trading of corporate bonds by Qualified Foreign Institutional Investors (QFIIs) is done on their behalf by their appointed authorized domestic dealer. When trading China Corporate Bonds, the QFII-authorized broker is required to secure confirmation from the QFII-authorized custodian that there are sufficient funds in the account, and that the investment does not exceed the SAFE-allotted investment quota. Once the confirmation is received from the custodian, the local broker executes the QFII’s order. The QFII and custodian are immediately informed of executed trades by the QFII domestic broker by means of a trade confirmation. Settlement is done by debiting the QFII’s RMB investment account for the amount traded. A settlement confirmation is issued by the QFII’s settlement institution to the QFII’s authorized custodian.

Payment of interest and redemption is directly credited to the Qualified Foreign Institutional Investor’s RMB settlement account.

Repatriation

Investments in the securities market by Qualified Foreign Institutional Investors must stay in the People’s Republic of China for a minimum of one year. QFII’s are required to apply with the State Administration on Foreign Exchange to purchase foreign exchange for repatriation of principal. The amount of the application cannot exceed 20% of the total principal, with each application at least one month apart. Funds are converted at the exchange rate at the time of  repatriation