China will relax controls on qualified foreign institutional investors (QFIIs) soon, following a decision to nearly triple the amount they can spend.

Regulators plan to scrap the requirement that a QFII invest at least half of its funds in stocks, said two people briefed by government officials about the matter.

They said waiving the rule would allow the foreign institutions to earmark more funds for investments in futures and other derivatives.

QFIIs, subject to the approval of the authorities, can exchange a certain amount of foreign currency into yuan to invest in Chinese equities and bonds.

Currently, they must invest half of their funds in A shares while holding no more than 20 per cent in cash.

The requirement resulted from officials’ worries that the funds, betting on an appreciation of the Chinese currency, would prefer to hold yuan deposits rather than buy yuan-denominated shares.

“The regulators are attempting…