China OKs eight provinces for investment

Eight provincial securities commissions have signed a deal with the China Banking Regulatory Commission (CBRC) in the hopes of encouraging institutional investors from mainland China to explore the Canadian market.

The securities commissions for British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick and Nova Scotia inked the Supervisory Cooperation Arrangement with the CBRC that now designates Canada as a destination for the Qualified Domestic Institutional Investor (QDII) Program in China.

“This agreement will give Canadian financial markets access to up to US$8 billion in investment capital,” said Minister of Finance Jim Flaherty. “This represents a strong vote of confidence in Canada’s economic prospects and the soundness of Canada’s financial system.”

The QDII program allows approved institutional investors from China, including banks, fund management companies and insurance firms, to invest funds pooled from their mainland clients in approved overseas financial markets.

“The CSA attaches considerable importance to Canada’s eligibility as a destination for the Qualified Domestic Institutional Investor Program,” stated Jean St-Gelais, chair of the CSA and president and CEO of the Autorité des marchés financiers (Québec). “This supervisory cooperation arrangement paves the way for Chinese commercial banks to conduct investments on behalf of their clients with Canadian-based financial institutions regulated by CSA participating jurisdictions. This could attract new capital to the Canadian market and open new markets to Canadian financial institutions.”

Seven of the eight participating Canadian securities commissions have already enacted the arrangement, with Ontario waiting for ministerial approval before enacting the arrangement on June 22, 2010.

“Through this program, CBRC recognizes the quality of Canadian securities market regulation,” said St-Gelais. “The CSA would like to thank the Canadian government for its assistance in concluding this arrangement.”

Minister Flaherty stated that this designation was a key objective of his trip to China in August 2009.

“This is a timely agreement, coming as our fellow G20 partners discuss the need to maintain open capital markets,” he said. “It also reinforces to me the value in personally visiting our trading partners to discuss issues of mutual importance. I hope to return to China in the near future to continue the valuable dialogue we have established.”

(04/27/10)