Banking News
- China's mainland, Hong Kong to monitor financing by mainland banks
Date: 11-Apr-2007 Sources: (People's Daily)
The China Banking Regulatory Commission (CBRC) and the Hong Kong Securities and Futures Commission (SFC) signed a memorandum of understanding on Tuesday to monitor investment activities in Hong Kong by mainland commercial banks.
In July 2006, China launched the qualified domestic institutional investor (QDII) system, allowing commercial banks and some other financial institutions to set up QDIIs, which raise Renminbi funds from Chinese citizens and institutions to buy foreign currency from the State Administration of Foreign Exchange (SAFE) for overseas investment.
The CBRC said that since QDII system was introduced Hong Kong has become the primary destination of QDII investment.
To step up cooperation with Hong Kong's supervisory institutions, the CBRC and the Hong Kong Monetary Authority (HKMA) jointly sponsored a joint working team on QDII businesses, with CBRC, SAFE, HKMA and HKSFC as members.
This move aims to establish a supervisory cooperative framework, under which the four institutions can coordinate monitoring and information exchange, said the CBRC.
Closer cooperation among the monitoring institutions will help discover risks, so corresponding measures can be taken to protect investors' interests.
The CBRC and SAFE are discussing new policies on expanding overseas investment targets by QDIIs allowing them to invest in new sectors, said the CBRC.
QDIIs are currently allowed to invest only in fixed-return financial products.
So far, 30 financial institutions -- 11 domestic banks, seven foreign banks, 11 insurance companies and one mutual fund -- have been granted QDII status.
In the latest development, trust companies will also be allowed to set up QDIIs, according to an announcement made jointly by the CBRC and the SAFE on Tuesday.
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