China to Open On-Exchange ETF Options to Foreign Investors for Hedging Use Only
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China's top securities regulator has announced that qualified foreign institutional investors will be allowed to participate in on-exchange trading of exchange-traded fund (ETF) options starting October 9, 2025, with transactions limited strictly to hedging purposes.
According to the China Securities Regulatory Commission (CSRC), the measure is part of ongoing efforts to optimize the Qualified Foreign Institutional Investor (QFII) and RMB Qualified Foreign Institutional Investor (RQFII) mechanisms. The reform was introduced in consultation with the People's Bank of China and the State Administration of Foreign Exchange, under the legal framework governing foreign access to domestic securities and futures markets.
ETF options, which offer more precise and flexible hedging tools for managing portfolio risks, will now be accessible to foreign institutional investors via approved trading venues regulated by the State Council or the CSRC. All trading activities must comply with relevant CSRC and exchange rules.
The CSRC described the move as a concrete step in implementing policy directions set out by the 20th Central Committee's Third Plenary Session, particularly the commitment to enhancing institutional openness in the capital market.
Since the beginning of 2025, the regulator has gradually eased restrictions on foreign investor access to domestic commodity futures, commodity options, and ETF options. The latest expansion aims to broaden the investable universe available to global institutions and to better align their investment needs with suitable risk management tools.
The regulator emphasized that enhancing the stability of foreign capital participation in the A-share market remains a key objective. By enabling more precise hedging instruments, authorities hope to foster a longer-term, more resilient approach among foreign investors.
Further reforms are expected. The CSRC noted that additional measures will follow to improve the foreign investor framework and deepen the institutional opening of China's capital markets.
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