SHANGHAI-It is not unusual for China’s regulators to err on the side of caution. The country began its Qualified Domestic Institutional Investor (QDII) program in 2006, which gives citizens the ability to invest globally through specially licensed Chinese asset managers. It started off slowly, only allowing participants to invest in fixed-income products.
As those restrictions were lifted, however, the QDII program grew rapidly, boosted by regulations that allowed joint ventures with international firms. This, noted a report, Buy-Side Technology in Asia, released by Celent in January, will help drive technology adoption.
“The government has also resumed granting joint venture licenses to foreign firms, which will draw more international asset managers into the market,” the Celent report says. “These international companies will likely bring more advanced technologies and strategies that they will then share with their local partners.”
Even in this capital-heavy country, the economic downturn is making its mark. Standard Chartered Bank (China) Ltd. is currently under fire for low returns and for allowing unqualified investors access to QDII products. In reaction, the China Banking Regulatory Commission has indicated that standards for accessing QDII products could be revised.
A focus on risk management could drive technology spending, the report notes. “Brokerages have already been adopting new technologies due to their exposure to Western firms with advanced tools,” the report says. “Investment managers operating in China also need to be prepared for increased scrutiny, especially in light of the risk management failures at Western firms.”
Source: Waters Online, 01.04.2009
Filed under: Asia, China, News, Risk Management , Asia, China 中国, CSRC China Securities Regulatory Commision, QDII, Retail Banking, Risk Management
