Qualified Domestic Institutional Investor
Encyclopedia
Qualified Domestic Institutional Investor , also known as QDII, is a scheme relating to the capital market
set up to allow financial institutions to invest in offshore markets such as securities and bonds. Similar to QFII (Qualified Foreign Institutional Investor), it is a transitional arrangement which provides limited opportunities for domestic investors to access foreign markets at a stage where a country/territory’s currency is not traded or floated completely freely and where capital is not able to move completely freely in and out of the country.
, QDII allows investors to invest in foreign securities markets via certain fund management institutions, insurance companies, securities companies and other assets management institutions which have been approved by China Securities Regulatory Commission
("CSRC").
On 13 April 2006, the Chinese government announced the QDII scheme, allowing Chinese institutions and residents to entrust Chinese commercial banks to invest in financial products overseas. But the investment was limited to fixed-income and money market products.
After granting 15 banks and funds a total quota of US$14.2 billion to invest overseas, the Chinese government announced on 11 May 2007 to widen the scope of the QDII investment. With certain restriction, banks can now offer stocks
related products. The net value of a QDII product investing in stocks must not exceed 50%, with the net value represented by a single stock capped at 5%. The minimum commitment by each client is 300,000 yuan
. Also, the stocks invested or the fund linked must be listed on or approved by the area that have signed memorandums of understanding
with the CSRC
.
In November 2007, Premier Wen Jiabao
stated the need to further study the scheme for individual Mainland Chinese residents to invest in stocks in Hong Kong. See
Through train scheme to be discussed. See also Premier says caution necessary before opening floodgates to Hong Kong shares.
On April 8, 2008, an agreement between the China Banking Regulatory Commission
and the U.S. Securities and Exchange Commission made it possible for Chinese individuals to invest in the US stock market.
Capital market
A capital market is a market for securities , where business enterprises and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets...
set up to allow financial institutions to invest in offshore markets such as securities and bonds. Similar to QFII (Qualified Foreign Institutional Investor), it is a transitional arrangement which provides limited opportunities for domestic investors to access foreign markets at a stage where a country/territory’s currency is not traded or floated completely freely and where capital is not able to move completely freely in and out of the country.
QDII in China
In People's Republic of ChinaPeople's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
, QDII allows investors to invest in foreign securities markets via certain fund management institutions, insurance companies, securities companies and other assets management institutions which have been approved by China Securities Regulatory Commission
China Securities Regulatory Commission
The China Securities Regulatory Commission is an institution of the State Council of the People's Republic of China , with ministry-level rank...
("CSRC").
On 13 April 2006, the Chinese government announced the QDII scheme, allowing Chinese institutions and residents to entrust Chinese commercial banks to invest in financial products overseas. But the investment was limited to fixed-income and money market products.
After granting 15 banks and funds a total quota of US$14.2 billion to invest overseas, the Chinese government announced on 11 May 2007 to widen the scope of the QDII investment. With certain restriction, banks can now offer stocks
Stocks
Stocks are devices used in the medieval and colonial American times as a form of physical punishment involving public humiliation. The stocks partially immobilized its victims and they were often exposed in a public place such as the site of a market to the scorn of those who passed by...
related products. The net value of a QDII product investing in stocks must not exceed 50%, with the net value represented by a single stock capped at 5%. The minimum commitment by each client is 300,000 yuan
Chinese yuan
The yuan is the base unit of a number of modern Chinese currencies. The yuan is the primary unit of account of the Renminbi.A yuán is also known colloquially as a kuài . One yuán is divided into 10 jiǎo or colloquially máo...
. Also, the stocks invested or the fund linked must be listed on or approved by the area that have signed memorandums of understanding
MOU
MOU, MoU, Mou or mou may refer to:* Memorandum of understanding* Minutes of Use, in telecommunication operations* Ministry of Unification, a branch of the South Korean government.* The Museum of Osaka University...
with the CSRC
CSRC
CSRC can stand for:*China Securities Regulatory Commission* Computer Security Resource Center, a NIST division*Conflict Studies Research Centre, a former college of the Defence Academy of the United Kingdom...
.
In November 2007, Premier Wen Jiabao
Wen Jiabao
Wen Jiabao is the sixth and current Premier and Party secretary of the State Council of the People's Republic of China, serving as China's head of government and leading its cabinet. In his capacity as Premier, Wen is regarded as the leading figure behind China's economic policy...
stated the need to further study the scheme for individual Mainland Chinese residents to invest in stocks in Hong Kong. See
Through train scheme to be discussed. See also Premier says caution necessary before opening floodgates to Hong Kong shares.
On April 8, 2008, an agreement between the China Banking Regulatory Commission
China Banking Regulatory Commission
The China Banking Regulatory Commission is an agency of the People's Republic of China authorised by the State Council to regulate the banking sector of the PRC except the territories of Hong Kong and Macau, both of which are special administrative regions...
and the U.S. Securities and Exchange Commission made it possible for Chinese individuals to invest in the US stock market.
See also
- Qualified Foreign Institutional InvestorQualified Foreign Institutional InvestorThe Qualified Foreign Institutional Investor is a program that was launched in 2002 in People's Republic of China to allow licensed foreign investors to buy and sell yuan-denominated "A" shares in China's mainland stock exchanges...
(QFII) - China Securities Regulatory CommissionChina Securities Regulatory CommissionThe China Securities Regulatory Commission is an institution of the State Council of the People's Republic of China , with ministry-level rank...
- Xinhua A50 China Tracker
- State Administration of Foreign ExchangeState Administration of Foreign ExchangeThe State Administration of Foreign Exchange of the People's Republic of China is an administrative agency tasked with drafting rules and regulations governing foreign exchange market activities, and managing the state foreign exchange reserves, which at the end of July 2011 stood at $3.2 trillion...
(SAFE) - Economy of the People's Republic of ChinaEconomy of the People's Republic of ChinaThe People's Republic of China ranks since 2010 as the world's second largest economy after the United States. It has been the world's fastest-growing major economy, with consistent growth rates of around 10% over the past 30 years. China is also the largest exporter and second largest importer of...
- Chinese financial systemChinese financial systemChina's financial system is highly regulated and has recently begun to expand rapidly as monetary policy becomes integral to its overall economic policy...
- Banking in ChinaBanking in ChinaChina's banking system has undergone significant changes in the last two decades: banks are now functioning more like banks than before. Nevertheless, China's banking industry has remained in the government's hands even though banks have gained more autonomy...