The first UK license to use Chinese RMB to purchase Chinese stocks from outside of China, known as RQFII (RMB Qualified Foreign Institutional Investor), was granted last week to the London-based Ashmore Group in a much-anticipated deal that also included the appointment of HSBC as custodian for the new investment product.

The UK is the first country outside of Hong Kong to get the RQFII system. Singapore is next. Previously, the only way for foreigners to invest in the Chinese sharemarket was through the more limited QFII system, which required foreign currency to be transferred for a transaction and had a lot of restrictions on stock purchases. About US$13 billion has been allocated to the UK for first-round RQFII licenses.

Z-Ben, the Chinese research firm which specializes in funds management, said last week: “The Ashmore Group, which was awarded a QFII license in 2009 and formed a fund management JV with China Central Securities Company in 2012, has likely not yet been told the size of their RQFII quota grant by SAFE [the Chinese regulator for foreign currency]. While Ashmore should have been on anyone’s shortlist of most likely London RQFIIs, the suddenness of their selection provokes important strategic questions about how best to offer China exposure for firms that may or may not be short-term bets for RQFII participation.”

Z-Ben says the only other UK manager which ticks all the boxes for early RQFII acceptance is Schroders. The system of granting licenses in China is somewhat opaque but the China research company believes that three main criteria are being used for the early RQFII licenses: “QFII status, in-China product and research experience gained through a JV funds management partnership, and being natively British (put another way, being regulated stem-to-stern by RQFII’s local governor, FCA)”.

The research firm tips that Aberdeen, Barings and Henderson may be the first to get a UK license to launch a bond fund in China.