Irish Financial Services Regulatory Authority Signs Memorandum Of Understanding With China

Author:Mr Andrew Bates
Profession:Dillon Eustace
 
FREE EXCERPT

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

financial risk.

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.

This...

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