Qualified Foreign Institutional Investor – Definition

Cite this article as:"Qualified Foreign Institutional Investor – Definition," in The Business Professor, updated January 14, 2020, last accessed May 30, 2020, https://thebusinessprofessor.com/lesson/qualified-foreign-institutional-investor-definition/.

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Qualified Foreign Institutional Investor

A Qualified Foreign Institutional Investor (QFII) is a non-Chinese individual or organization granted permission by the Government of China to trade on stock exchanges in Shanghai and Shenzhen.

A Little More on What is a Qualified Foreign Institutional Investor

Prior to the creation of the Qualified Foreign Institutional Investor status in 2002, foreign individuals were not allowed to buy or sell securities on a Chinese exchange. China is still a controlled economy, but this exemption is a major step toward an open market.

The Chinese State Administration of Foreign Exchange grants permission and sets quotas for the value of securities that can be purchased or traded on the exchange. The requirements for approval to trade on the exchange vary depending on the type of trader. Allowed securities include those approved by China’s Securities Regulatory Commission, such as listed stocks of domestic companies (“A” Shares), treasury bonds, corporate debentures, and convertible bonds. The program also allows investors to make hedge their investments to protect against foreign exchange risks.

References for “Qualified Foreign Institutional Investor – QFII

https://en.wikipedia.org/wiki/RMB_Qualified_Foreign_Institutional_Investor

https://www.investopedia.com › Investing › Investing Strategy

english.sse.com.cn/investors/qfii/what/

https://www.fxcm.com/markets/…/what-is-a-qualified-foreign-institutional-investor/

https://www.lexology.com/library/detail.aspx?g=c0593bfc-8a55-45ed-988c…

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