CHINA’S foreign currency regulator has fined two domestic asset managers for misusing offshore investment quotas, part of government efforts this year to crack down on illegal foreign exchange transactions and ward off systemic risks.

In one case, the asset management unit of Haitong Securities Co. provided Qualified Domestic Institutional Investor (QDII) quotas to unqualified companies and cheated the regulator, the State Administration of Foreign Exchange (SAFE) said in a statement on its website.

Haitong Asset Management was fined 7.75 million yuan (US$1.17 million) for facilitating illegal transfer of funds worth US$16.28 million.

In the other case, Lion Fund Management Co. bought and sold U.S. dollars using its QDII quota for currency arbitrage, and was fined nearly 1 million yuan, the SAFE said in the statement.

QDII allows Chinese investors to buy overseas stocks and bonds. Issuance of fresh quotas under the program was suspended two years ago as part of China’s efforts to stem capital outflows at the time.

So far, the foreign currency regulator has issued a total of 89.99 billion yuan worth of QDII quotas to 132 institutions.

China also launched the Qualified Foreign Institutional Investor (QFII) program in 2003 to allow foreigners to invest in Chinese shares and bonds.

(SD-Agencies)