DEFINITION of 'Qualified Domestic Institutional Investor - QDII'

An institutional investor that has met certain qualifications to invest in securities outside its home country. The most popular QDII program comes from the People's Republic of China, where the main regulatory body (the China Securities Regulatory Commission) may grant a limited avenue for institutional investors such as banks, funds and investment companies to invest in foreign-based securities.

The overall restrictions on ownership are in place for several reasons, including currency conversion concerns in nations where the currency is not free-floating.

BREAKING DOWN 'Qualified Domestic Institutional Investor - QDII'

QDII programs are used in places where the capital markets are not yet completely open to all investors. For example, any institutional investor in China that obtains approval to be a QDII may invest up to 50% of net assets into allowable foreign securities, so long as not more than 5% is invested in any one security. Only certain foreign markets are eligible for investment, including Britain and Hong Kong.

The QDII program in China was set up partly to provide the growing number of domestic investors with a place to park their funds; only a few hundred local stocks are listed on the Shanghai and Shenzhen stock exchanges.

RELATED TERMS
  1. Qualified Foreign Institutional ...

    A program that permits certain licensed international investors ...
  2. Institutional Investor

    An institutional investor is a nonbank person or organization ...
  3. Institutional Ownership

    Institutional ownership refers to stock that is held by investment ...
  4. Foreign Qualification

    Foreign qualification gives a corporation the legal right to ...
  5. China Concepts Stock

    China Concepts Stock is the stock of a company whose assets or ...
  6. Foreign Institutional Investor ...

    Foreign institutional investors (FII) typically consist of large ...
Related Articles
  1. Financial Advisor

    China’s Stock Markets vs U.S. Stock Markets

    The U.S. and China are home to the biggest stock markets in the world, but they are very different in a number of important ways.
  2. Investing

    Foreign Firms Face Increasing Barriers in China

    Foreign firms are facing increasing protectionism and uncertainty regarding intellectual rights protection when expanding into China.
  3. Tech

    China's Economic Collapse Good For the U.S.?

    After years of unprecedented expansion, growth in China has finally begun to slow. Does the United States need to worry or can it benefit?
  4. Investing

    Top 5 Chinese Mutual Funds (MCDFX, FHKCX)

    Learn about some of the most popular and best performing mutual funds that offer investors exposure to the important emerging market economy of China.
  5. Insights

    Top 6 Factors That Drive Investment In China

    FDI in China surpassed $100 billion in 2010, certain key factors drive foreign direct investment.
  6. Insights

    China’s Foreign Exchange Reserves Plummet

    China’s economy comes under pressure after the country's foreign exchange reserves fall to the lowest level in over four years.
  7. Investing

    iShares Silver Trust ETF: Who Is Invested? (SLV)

    Discover the top institutional owners of the iShares Silver Trust exchange-traded fund (ETF), their exact ownership and their recent position adjustments.
  8. Investing

    Institutional Investors And Fundamentals: What's The Link?

    Big-money sponsorship might make a company look good, but it's not always a reliable gauge of stock quality.
  9. Investing

    Benefits From A Tango Of China-US Trade and Debt

    China has been accumulating US debt for many decades. Here's why it continues to do so, and the risks and benefits of this for both the US and China.
  10. Insights

    4 Ways China Influences Global Economics

    Learn the four ways China's economy can influence the global economy. The recent decline in Chinese stock markets should be the least of your worries.
RELATED FAQS
  1. Common examples of marketable securities

    Learn about marketable securities and the most common types of debt and equity securities, including common stock, bonds ... Read Answer >>
  2. What are the 9 major financial institutions?

    There are nine major types of financial institutions. Understand the major types of financial institutions that exist and ... Read Answer >>
  3. How Are Global and International Funds Different?

    In English, 'global' and 'international' tend to be used interchangeably—hence the confusion. Read Answer >>
  4. What are the most common market indicators to follow the Chinese stock market and ...

    Learn the most commonly followed market and economic indicators used by market analysts to track the Chinese stock market ... Read Answer >>
  5. What is foreign exchange?

    Foreign exchange is the conversion of a country's currency into another. In a free economy, a country's currency is valued ... Read Answer >>
Hot Definitions
  1. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  2. Inflation

    Inflation is the rate at which prices for goods and services is rising and the worth of currency is dropping.
  3. Discount Rate

    Discount rate is the interest rate charged to commercial banks and other depository institutions for loans received from ...
  4. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  5. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  6. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
Trading Center