QFII,Qualified Foreign Institutional Investors,is a mechanism which allows a qualified foreign institutional investor to convert its currency into that of another country,and put it into that country's security market.The yield and dividend will be converted back and sent out of the country at a later date.

Both the amount of the foreign currency and the yield are under strict restriction and examination of the country.The investors are also required to set up special accounts in local banks for their money.

QFII is an interim mechanism adopted by a country who wants to introduce foreign investment yet whose currency is not totally convertible and capital projects are not open.

It works as restriction on the amount of foreign capital entering a country's security market.

China's Taiwan Province,South Korea,India and Brazil introduced the scheme in the early 1990s.