Chinese regulators issued more relaxed investment rules under the Renminbi Qualified Foreign Institutional Investor (RQFII) program on Monday, a step to open its market and give foreign investors more freedom to buy A shares in mainland China.

Under the revised rules, RQFII investors would be given quotas not greater than a certain proportion of their asset sizes after registration with the State Administration of Foreign Exchange (SAFE) instead of giving a specified amount like before, Reuters reported.

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The new policy, which was issued before the inauguration of the Shenzhen-Hong Kong stock connect scheme, intends to ease the approval procedure for RQFII quota that foreign investors can use for A-share purchases, according to South China Morning Post.

If the intended investment quota surpasses the base quota, investors need to secure approval from SAFE, Reuters reported citing a notice from the People's Bank of China. Furthermore, if the overall size of the assets under foreign management grows, the quota would also increase accordingly.

Institutional investors, who want to increase their A-share investments beyond their existing quota may also apply for additional quota.

"It is a positive message to global investors that Beijing hopes they can play a bigger role in the domestic market," He Yan, hedge fund manager of Shanghai Shiva Investment, told the South China Morning Post. "It's obvious that China will further open up the market."

Before, individual RQFIIs had to gain approval from SAFE to acquire stocks and bonds in China, and the amount of quota was usually given on a case to case basis, according to The Star.

"This will benefit mostly asset managers whose asset sizes are big but investment quotas are limited," an anonymous source told The Star.

The amendments come just months after China also changed the US dollar-based QFII investment scheme in February, increasing its investment limit for foreign investors.

The RQFII program was made in 2011 to permit financial firms to use offshore yuan to acquire securities such as stocks, bonds, and money market investments in China.

TagsRQFII, Renminbi Qualified Foreign Institutional Investor, SAFE, state administration of foreign exchange, foreign investors, yuan