Market participants urged to enhance risk management, speed up innovations
The mainland's qualified domestic institutional investor (QDII) scheme, which allows the country's banks and mutual funds to pool clients' holdings for investments in offshore securities, should continue to expand in the near future, the chairman of China's banking regulator said yesterday.
'My thinking is the more the better in the near future so long as the banks are qualified,' China Banking Regulatory Commission chairman Liu Mingkang said.
Banks must be able to manage the resultant risk and ensure adequate transparency and information disclosure to clients, he said.
Mr Liu expressed concern about banks' limited ability to hedge against currency exposure in the new business and manage counterparty risk. Their lack of capability in pricing overseas investment products was also an issue.
The government, facing a rapid build-up of foreign reserves and strong foreign direct investments, earlier this year sought to reduce domestic excess liquidity and pressure for further yuan appreciation by allowing its banks and mutual funds to pool funds from clients for investment in offshore securities.
