The Legal Study On Overseas Financial Management Products Of Chinese Domestic Commercial Bank (QDⅡ)

The QDII, Qualified Domestic Institutional Investors, is a temporal system which isfunctional for Chinese capital market, while it is gradually opening, unless mature. TheQDII system grows very fast since it is made in China. The overseas financialmanagement products is a very important phrase in the catalog of QDII system. SincePeople’s bank of China, China Banking Regulatory Commission and Administration ofExchange Control made <<interim procedures on overseas financial managementproducts>> on April17th,2006, the QDII system of Chinese bank has started to effectofficially, however a lot of legal issues appeared during the real operation. This researchpaper analyzes issues, makes suggestions and provides possible solutions for these legalissues in the real operational.The paper is divided to four parts.First part of this paper is an introduction to QDII. The author introduces the conceptand classifications first and detailed the discussion on the concepts, characteristic,features and operational procedures. Author analyzed on the legal nature of QDII anddiscussed on two different popular views, commission theory and trust theory with QDIIsystem itself. Finally, author concluded that QDII of Chinese bank is trust theory of the legal nature.Second part of this paper is main part of this paper. This part mainly discussed thelegal issues exist in QDII during real operation. And this part discussed issues on banksupervision (market access issues, foreign exchange control issues, informationdisclosure issue), custodian bank supervision, disputes between investors andbank(issues on making contracts, unreasonable design of financial products, irregularoperation by bank, bankruptcy of commercial bank), protection from mother country forinvestors, and provided possible solutions to each corresponding issues.In third Part of this paper, author did generally study on QDII and relevantinternational legal system. At first, the author introduced and analyzed the system ofdeveloped countries such as American, Japan, and European Union. We can takeadvantage of their experiences in the capital market and construct the better protectionsystem for investors. Then the author introduced and researched on the QDII system ofcountries who applied QDII before like South Korea, Taiwan, chili….The author want tolearn the experiences from them to provide suggestions for improving the establishmentprocess of Chinese QDII system.In the fourth part, the author showed her suggestions on the legislation of ChineseQDII system. She think the QDII system should be applied under the protection of thecompleted legal system as moving up the legislate level, completing relevant legalsystems, keeping improving the foreign exchanges controls, establishing the mechanismto protect investors. She believes the frame of Chinese commercial bank QDII systemshould make adjustments to make every sure relevant department functional well andcollaborate well. Government should improve the mechanism to protect investors whenincreasing the level of supervision.The Chinese commercial bank QDII system is a very important milestone during theopen process of Chinese capital market. In author’s view, the Chinese QDII system willcontribute very much to the open process of capital market, only if policy makers keep solve issues and complete relevant laws.