Qualified Foreign Institutional Investor (QFII)

Qualified overseas institutions

Investors (qualified foreign institutional investors) refer to the qualification accreditation system for overseas professional investment institutions to invest in China when the currency of a country is not fully convertible and the capital account is not yet open. As a transitional institutional arrangement, the main purpose of the system is to introduce foreign capital and open the capital market. Because of the potential financial risks of overseas institutional investors, it is necessary to restrict them. China Securities Regulatory Commission needs to approve the qualifications of overseas investors. The State Administration of Foreign Exchange controls the scale of overseas investors by issuing quotas. QFII usually includes overseas fund management institutions, securities companies, insurance companies and other asset management institutions.

For example:

From the standpoint of China, QFII is the fund manager who is issued in countries outside China and participates in the investment in China's capital, bonds or foreign exchange market through legal channels, while QDII mentioned in the previous section is the fund manager who is issued in China and participates in the investment in China's capital, bonds or foreign exchange market through legal channels.

One day, Q outside China told D inside China that I am QFII and I want to invest in A shares. Please be my agent. D said: ok. After that, agent D opened a fund account with the custodian bank in the name of OFII, and opened a securities account with a securities company. When the funds are remitted, QFII will directly remit the funds to the custodian bank and convert them into RMB and remit them to the opening bank.

Fund account, then QFII will inform the agent of the order to buy and sell A-share securities, and the agent will issue the order to buy and sell securities to the securities company. When QFII wants to remit funds, it is a general process for the custodian bank to remit funds to QFII's overseas account.

QFII and ROFII:

QFII is a qualified foreign institutional investor, which means that foreign institutions raise US dollars and then convert them into RMB direct investment A shares after approval; RQFII is an overseas institutional investor of RMB, also known as small QFII, and its quota is smaller than QFII. It is a system in which overseas institutions make domestic investment in RMB, that is, overseas RMB invests in A shares through securities companies and fund companies in China and Hongkong. So the difference between the two is mainly the use of money.