New Chinese Depository Receipt Rules Encourage Use of Renminbi for Cross-border Settlements
Beijing has launched new regulations governing cross-border remitance of funds raised via Chinese depository receipts (CDR).
The People’s Bank of China (PBOC) and the State Administration of Foreign Exchange (SAFE) issued the trial version of the “Depository Receipt Cross-border Fund Administrative Measures” (存托凭证跨境资金管理办法（试行）) on 27 May, which came into effect on the same date.
The Measures encourage the use of renminbi for cross-border settlement in relation to CDR operations, as well as the use of the Cross-Border Inter-Bank Payments System (CIPS) (人民币跨境支付系统) for the completion of cross-border renminbi settlement.
Other areas covered by the Measures include the administration of funds for CDR issuance, the administration of cross-border fund transfers, depository funds administration and statistical and regulatory administration.
“Depository receipts” as used in the Measures refers to both depository receipts issued within China by the original issuers of securities overseas (Chinese depository receipts), as well as depository receipts issued by domestic Chinese companies abroad (overseas depository receipts).
Under the Measures renminbi or foreign exchange funds that are raised via the domestic issuance of CDR’s underpinned by new securities issued by overseas issuers may be remitted abroad, or retained within China for domestic usage.