Qualified Foreign Institutional Investor

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A qualified foreign institutional investor (QFII) is allowed to convert a certain amount of foreign exchange into the renminbi and, through strictly supervised special accounts, invest it in the Chinese securities market, including A-shares, bonds, convertible bonds, corporate bonds, and other financial products the China Securities Regulatory Commission (CSRC) approves.[1]

Experts started suggesting the introduction of QFIIs in as the second half of 2001. On June 10, 2002, the CSRC Chairman Zhou Xiaochuan, at the 27th annual meeting of the International Organization of Securities Commissions (IOSCO), mentioned about the possibility of QFIIs. On Nov. 5, 2002, "Interim Procedures for Domestic Securities Investment by Qualified Foreign Institutional Investors" was formally announced.

There are 88 QFIIs as of November 2009.[2] Participating QFIIs received $17.72 billion in quotas as of the end of June 2010, the China Securities Journal reported.[3]

Latest News

In May 2010, the U.S. Treasury Department announced that QFIIs would be allowed to trade equity futures.[4] The department made the statement on May 25, at the end of the U.S.-China Strategic & Economic Dialogue in Beijing. Futures on the CSI 300 Index at a preset value began trading on the China Financial Futures Exchange in Shanghai on April 16, while margin trading and short selling launched on March 31.

A July 2010 report in the China Securities Journal, cited by Bloomberg, said China may allow qualified foreign institutional investors to use as much as 10 percent of their investment quotas to trade stock-index futures.[5]

References

  1. QFII Business in China. Haitong Securities.
  2. List of QFII. China Securities Regulatory Commission.
  3. China May Allow QFIIs to Trade Futures, Report Says. Bloomberg.
  4. Fact Sheet Second Meeting of the U.S.-China Strategic & Economic Dialogue. U.S. Treasury Department.
  5. China May Allow QFIIs to Trade Futures, Report Says. Bloomberg.