China (Shanghai) Pilot Free Trade Zone has recently released the Opinions on Expanding Opening-up of the Financial Service Sector and Further Creating New Advantages for Development and Openness (the "Opinions").The Opinions outline twenty five initiatives in six aspects and to provide the preferential policies for foreign financial institutions. Shanghai Dongjin finds the below as the main points.

1. The Opinions propose to inspire foreign banks to establish both branches and subsidiaries, support efforts of commercial banks in initiating to found financial asset investment companies and wealth management companies that are free from limits on foreign shareholding.
2. Foreign banks are also urged to engage in a wider range of businesses, such as trust, financial leasing, auto finance, money broking, consumer finance and other banking sectors.
3. The Opinions encourage foreign securities firms and insurance companies to entice foreign investors as major shareholders of stock brokerages, fund management companies and futures companies.
4. Foreign financial institutions are allowed to establish a branch and subsidiary at the same time while foreigners can own majority stakes in domestic life insurance companies in the FTZ.
5. Overseas central banks and international financial bodies are allowed to establish their representative offices or branches in the FTZ.
6. Rating agencies are allowed to conduct credit rating business in the interbank bond market.
7. The Opinions support leading trans-national asset management companies to set up their regional headquarters in the FTZ to build a comprehensive development platform for asset management in the zone.
8. The Opinions allow foreign institutions which have the actual business to form financial leasing companies in the FTZ.
9. The rewards are given to good foreign banks, insurance companies and securities firms.
10. The Opinions put in place the administrative policy on pre-entry national treatment and negative list in all aspects.
11. The FTZ will also urge the Shanghai Stock Exchange, the Shanghai Futures Exchange and the China Financial Futures Exchange to cooperate with “Belt and Road” countries and regional financial markets.
12. The Opinions endorse the endeavor of overseas innovative enterprises to offer Chinese Depository Receipts (CDR) in Shanghai, and strive to initiate the "Shanghai-London Stock Connect" within this year.
13. The Opinions enhance strategic cooperation with the offshore yuan market to promote the issuance of yuan bonds and asset securitization products by overseas institutions and enterprises. It will also encourage financial institutions of “Belt and Road” countries to establish branches in the FTZ.
14. The Opinions encourage foreign-funded financial institutions to help build Zhangjiang Science City and set up branches there. Overseas investors are allowed to invest in sci-tech startups through a “qualified foreign limited partner” scheme.
15. Qualified overseas talents can open free trade foreigner accounts at financial institutions in the FTZ, and their lawful earnings in China are deemed as overseas capital investment to help them start a business.
16. The FTZ will also create a multi-level financial dispute resolution mechanism in line with international rules as well as an integrated financial supervision platform to monitor financial risks.

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Mr. Mike Chang

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