The signing of the MoU is the result of
negotiations started in 2008 and places Malta’s funds industry
at the same level with the major fund domiciles particularly in
the European Union. It will most importantly facilitate business
for financial institutions doing business between the two
countries. A similar agreement with the China Banking Regulatory
Commission (the "CBRC") is expected to be signed shortly.
As result of the signing of the MoU, Chinese
Qualified Domestic Institutional Investors (“QDII”) are able to
invest on behalf of Chinese investors into Malta domiciled
investment funds (Professional Investor Funds and UCITS funds)
regulated by the MFSA, thereby opening up MFSA regulated funds
to one of the world's largest pools of private capital. 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 and these entities then invest in overseas
financial products. The stocks or investment funds in which a
QDII invests must be listed on a stock exchange or regulated by
a regulatory authority that has signed a MoU with the CSRC.
Companies licensed by the MFSA will also be able
to access the Chinese Qualified Foreign Institutional Investor
("QFII") status and invest directly in China. The QFII scheme
permits qualified foreign investors to invest in the China A
share market under certain foreign exchange flow and disclosure
requirements. The major institutions that are permitted to apply
to be a QFII include fund management companies, insurance
companies, securities firms and commercial banks with
qualifications prescribed by the CSRC and the other relevant
regulators. Upon the approval by the CSRC, a QFII is granted an
investment quota by the State Administration of Foreign Exchange
("SAFE") and, after selecting a Chinese custodian bank and one
or more local brokers, may place orders to buy and sell stock in
the China A share market. The investment scope of a QFII extends
to treasury bonds, convertible bonds, corporate bonds, warrants
and other financial products approved by the CSRC.
The signing of the MOU is an important
development for the Maltese financial services sector. It will
provide a huge benefit for the funds industry and will be an
important factor for promoters selecting Malta to domicile their
funds
.
