Japan’s Financial Services Agency Establishes Framework For Regulatory Cooperation With China Related To QDII (Qualified Domestic Institutional Investors) System

Today, the Financial Services Agency of Japan (FSA) and the China Banking Regulatory Commission (CBRC) exchanged letters concerning the establishment of the framework for regulatory cooperation related to the QDII (''Qualified Domestic Institutional Investors'') system (and reached an agreement thereon).

This framework enables Chinese commercial banks to conduct wealth management business in Japan and contributes to the vitalization and strengthening of the competitiveness of Japan's financial and capital markets, as referred to in ''The Plan for Strengthening the Competitiveness of Japan's Financial and Capital Markets'' released at the end of 2007.

Based on this plan, The FSA held its first periodic meetings with the Chinese supervisory authorities and others in January, with the intention of enhancing bilateral cooperation with authorities in fast growing Asian markets.

It is becoming increasingly important for both Japanese and Chinese regulators to strengthen their relationships with respect to financial services. The establishment of this framework exemplifies concrete progress being made in enhancing bilateral cooperation.

Note:QDII system (''Qualified Domestic Institutional Investors)

• In China, when it comes to overseas wealth management business, Chinese domestic financial institutions need to be authorized as QDIIs (''Qualified Domestic Institutional Investors'') by the CBRC in order to invest in foreign countries.
• Under this system, the overseas wealth management business is conditional on the establishment of a framework for regulatory cooperation between the CBRC and the supervisory authorities in the overseas countries/areas where the investment is made.