Paul Browne, Partner, London Yongmei Cai, Partner, Beijing Jay Lee, Partner, Hong Kong

One Belt One Road and RMB internationalisation: a look at how recent PRC regulatory developments provide significant opportunities for market participants in the Financial Markets in the UK and Europe Paul Browne, Partner, London Yongmei Cai, Partner, Beijing Jay Lee, Partner, Hong Kong

One Belt One Road and RMB internationalisation Setting the scene OBOR and RMB internationalisation : what are they and why are they important What we will cover today Key regulatory developments Market trends and opportunities 1 / B_LIVE_EMEA1:2813811v1

PRC regulatory developments Fast pace of regulatory change to be considered in context of internationalisation of RMB Some key developments development of offshore RMB bond market 8 October 2015: Cross-border Interbank Payment System (CIPS) to be launched 14 September 2015: NDRC Notice on Corporate Foreign Debt Issuance 1 June 2014: SAFE Rules on Cross-border Guarantees QFII / RQFII QDII / QDII 2 Free Trade Zones Shanghai / Hong Kong Stock Connect also Bond Connect? Panda bonds 2 / B_LIVE_EMEA1:2813811v1

Top 10 payment currencies in the world % of global payments, as of March 2015 50% 44.64% 40% 30% 20% 22.21% 10% 8.49% 3.07% 2.03% 1.93% 1.88% 1.64% 1.17% 1.04% 0% USD EUR GBP JPY CNY CAD AUD CHF HKD THB Source: SWIFT, Standard Chartered Research Simmons & Simmons LLP 2015. 2013. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 3 // B_LIVE_EMEA1:2813811v1

OBOR Purpose and goals Purpose Achieve win-win cooperation that promotes common development and prosperity Enhance mutual understanding and trust, and strengthen all-round exchanges Encourage Chinese firms to go abroad in search of new markets or investment opportunities Help resolve certain strategic problems related to overcapacity, industrial restructuring and imbalance in foreign trade Promote RMB internationalization 4 / B_LIVE_EMEA1:2813811v1

OBOR Countries, regions and projects involved Overview map of OBOR routes 5 / B_LIVE_EMEA1:2813811v1

OBOR Countries, regions and projects involved Countries In general, approximately: 43 countries in Asia; 16 countries in Europe; 4 countries in the Commonwealth of the Independent States; and 1 country in Africa are involved in the OBOR initiative. The table below sets out the countries involved in the OBOR initiative as of July 2015 6 / B_LIVE_EMEA1:2813811v1

OBOR Countries, regions and projects involved Countries Southeast Asia Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Laos, Brunei, Myanmar, Cambodia, Timor-Leste South Asia Central Asia Nepal, Bhutan, India, Pakistan, Bangladesh, Sri Lanka, Maldives Kazakhstan, Turkmenistan, Kyrgyzstan, Uzbekistan, Tadzhikistan, Afghanistan West Asia Central and East Europe Iran, Iraq, Georgia, Armenia, Azerbaijan, Turkey, Syria, Jordan, Israel, Saudi Arabia, Bahrain, Qatar, Yemen, Oman, Kuwait, etc. Albania, Bosnia, Croatia, Bulgaria, Czekh, Estonia, Hungary, Latvia, Lithuania, Macedonia, Romania, Poland, Serbia, etc. The Commonwealth of the Independent States Others Russia, Belarus, Ukraine, Moldova Mongolia, Egypt 7 / B_LIVE_EMEA1:2813811v1

OBOR Opportunities - Overseas Initial theme -- Overseas projects and financing opportunities Initial projects Transportation infrastructure projects such as railways, ports, roads, airports Central and South East Asia State level Cooperation opportunities with Chinese state resources and financial institutions through: Silk Road Fund Asia Infrastructure Investment Bank ( AIIB ) 8 / B_LIVE_EMEA1:2813811v1

OBOR Opportunities Provincial level All 31 Chinese provinces have indicated they will actively participate in the implementation of the OBOR initiative. Two-thirds of these provinces have included it as a development priority and have featured it in their annual work plans for 2015. Some examples: Qinghai Province Guangdong Province 9 / B_LIVE_EMEA1:2813811v1

OBOR Opportunities Private firms State-owned enterprises and large financial institutions are expected to take the centre stage at the initial phase. Construction machinery companies, building materials producers and infrastructure operating companies. 10 / B_LIVE_EMEA1:2813811v1

China onshore assets owned by foreigners Foreign portfolio investment in China s onshore assets is rising 1,400 1,200 1,000 800 600 399 420 468 512 531 540 Equities Bonds 569 594 559 634 638 651 672 706 716 713 400 200 345 333 327 319 334 345 364 428 443 462 471 505 556 513 550 601 CNY bn 0 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Source: PBoC, Standard Chartered Research 11 / B_LIVE_EMEA1:2813811v1

RQFII Programme has been expanded globally Data as of end April-2015 Quota ceiling for the region (CNY bn) Number of licences Approved quota (CNY bn) Hong Kong 270 79 270 Singapore 50 16 26 London 80 8 15 Paris 80 2 6 Korea 80 14 31 Frankfurt 80 1 6 Qatar 30 0 0 Canada 50 0 0 Australia 50 1 10 Switzerland 50 0 0 Luxembourg 50 0 0 Total 870 121 364 Source: SAFE, PBoC announcements, Standard Chartered Research Simmons & Simmons LLP 2015. 2013. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 12 // B_LIVE_EMEA1:2813811v1

Faster approvals under QFII, RQFII, and QDII Annual quota approval (CNY bn) 300 R-QFII QFII QDII 250 200 150 100 50 0 2011 2012 2013 2014 2015 Jan-Apr Simmons & Simmons LLP 2015. 2013. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 13 // B_LIVE_EMEA1:2813811v1 Note: QFII and QDII approvals are converted at USD-CNY=6.2 Source: SAFE, Standard Chartered Research

International debt securities by currency Outstanding amount (USDbn), % of world total 10,000 9,000 40.4% (8.8 tn) 41.1% (9 tn) 8,000 7,000 6,000 5,000 4,000 3,000 2,000 9.6% (2.1 tn) 1,000 0 2.0% (430 bn) 0.5% (119 bn) USD EUR GBP JPY CNY Source: BIS, Standard Chartered Research. *As of December 2014 Simmons & Simmons LLP 2015. 2013. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 14 // B_LIVE_EMEA1:2813811v1

Offshore RMB Bond Primary Issuances (RMB billion) 202 105 112 104 10 12 16 35 2007 2008 2009 2010 2011 2012 2013 2014 Source: BOCHY, Bloomberg Simmons & Simmons LLP 2015. 2013. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 15 // B_LIVE_EMEA1:2813811v1

Other developments China ABS Shanghai / Hong Kong Stock Connect Bond Connect 7 th China UK Economic and Financial dialogue 16 / B_LIVE_EMEA1:2813811v1

It s not a question of if, it s a question of when. IMF Managing Director Lagarde Simmons & Simmons LLP 2015. 2013. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated partnerships and other entities. 17 // B_LIVE_EMEA1:2813811v1

Let s create a golden decade for the UK-China relationship. Hon George Osborne MP, Chancellor of the Exchequer 18 / B_LIVE_EMEA1:2813811v1

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simmons-simmons.com elexica.com This document is for general guidance only. It does not contain definitive advice. SIMMONS & SIMMONS and S&S are registered trade marks of Simmons & Simmons LLP. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLP and the other partnerships and other entities or practices authorised to use the name Simmons & Simmons or one or more of those practices as the context requires. The word partner refers to a member of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individual with equivalent status in one of Simmons & Simmons LLP s affiliated practices. For further information on the international entities and practices, refer to simmonssimmons.com/legalresp. Simmons & Simmons LLP is a limited liability partnership registered in England & Wales with number OC352713 and with its registered office at CityPoint, One Ropemaker Street, London EC2Y 9SS. It is authorised and regulated by the Solicitors Regulation Authority. A list of members and other partners together with their professional qualifications is available for inspection at the above address. 20 / B_LIVE_EMEA1:2813811v1