In Beijing, on October 23, 2008 the Taoiseach, Brian Cowen
presided over the signing of a Memorandum of Understanding
("MoU") between the Irish Financial Services Regulatory
Authority (the "Financial Regulator"), the China
Securities Regulation commission (the "CSRC") and China
Banking Regulatory Commission ("CBRC").
The CSRC is the state agency responsible for the supervision and
regulation of national securities and futures markets in the
Peoples Republic of China ("PRC"). The CBRC is the state
agency that supervises deposit-taking financial institutions
ensuring the stability of operations and helping avoid excessive
The purpose of the MoU is to protect investors and promote the
development of the securities and futures markets by providing a
framework for co-operation, increased mutual understanding and the
exchange of information, to the extent permitted by the laws and
regulations in force in Ireland and the PRC, and the availability
of respective resources of both regulatory authorities.
The direct result of the signing of the MoU is that Chinese
Qualified Domestic Institutional Investors ("QDII") shall
now be able to invest on behalf of their clients in Irish domiciled
investment funds, regulated by the Financial Regulator.
Qualified Domestic Institutional Investors
The QDII scheme permits Chinese domiciled investors to invest in
foreign securities markets via certain fund management
institutions, insurance companies, securities companies and other
asset management institutions which have been approved by the CSRC
as QDII's. The QDII scheme, introduced in June 2006, allows
Chinese domiciled institutions and residents to invest with Chinese
commercial banks, as QDIIs, and for these entities to then invest
in overseas financial products.
At the time of the original launch of the scheme, any investment
by such as QDII was restricted to fixed-income and money market
products. The scope of the QDII scheme was widened in May 2007 and
QDII's may now invest in equity products. The stocks or
investment funds in which a QDII invests must be listed on a stock
exchange or regulated by a financial regulator that has signed a
MoU with the CSRC and CBRC.
The MoU made between the Financial Regulator, the CSRC and CBRC
now makes it possible for QDII collective investment schemes to
invest into Irish regulated funds.