The Symposium on Technical Services for Mutual Recognition to Cross-border Funds co-sponsored by Shenzhen Stock Exchange (SZSE), China Securities Depository and Clearing Co., Ltd. (CSDC) and Shenzhen Securities Communication Co., Ltd. (SSCC) was held in Shenzhen on December 7. The symposium was attended by over 60 distinguished guests including Zhang Yujun - Assistant Minister of China Securities Regulatory Commission (CSRC), Alexa Lam - Deputy CEO of Hong Kong Securities and Futures Commission and representatives from Hong Kong Monetary Authority (HKMA), Qianhai Administration Office (QAO), fund companies and banking sectors in Hong Kong and mainland China. In-depth discussion and exchange were carried out on topics including market demands, organization pattern and implementation schemes involved in technical services for the mutual recognition to cross-border funds.
Pushing forward the two-way opening of China’s capital market has been made clear in the Decision of the CCCPC on Some Major Issues Concerning Comprehensively Deepening the Reform. The traditional open-up channels like QFII, RQFII and QDII have seen constant growth in size for the recent years. The official launch of Shanghai-Hong Kong Stock Connect marks another important channel in the two-way opening, which is the connectivity of exchanges. On September 9, 2014, CSRC gave out its official reply to Shenzhen municipal government’s previous request for favorable policies for deepening capital market innovation and development in the Qianhai Area, suggesting CSDC and SZSE to coordinate and cooperate to research and work out the detailed scheme for the construction of a unified service platform for the Mutual Recognition in Qianhai Area, so as to provide cross-border sales, custody and settlement for funds domiciled in Hong Kong and mainland.
The Mutual Recognition can not only fully incorporate the characteristics of both sides, but also give full play to dual advantages, which helps to push our supervision and cooperation to a higher level, said Alexa Lam, Deputy CEO of Hong Kong Securities and Futures Commission. On such basis, a platform satisfying different customers and market demands in the area will gradually be formed, thus enhancing the competitiveness, attractiveness and voice of capital markets on both sides.
Compared to the existing channels, the Mutual Recognition is of great significance, said Song Liping, President & CEO of SZSE. First, the Mutual Recognition represents not only the opening of the capital market, but also the opening of services and trades. Taking such opportunity, domestic investors for the first time can enjoy services provide by famous overseas assets management companies and vice versa. Second, the scope for investors’ portfolio will be enlarged through the Mutual Recognition. For example, domestic investors can not only invest in stocks and bonds domiciled in Hong Kong, but also overseas products in the U.S., Europe, etc. Third, the investment in the counterpart markets through the Mutual Recognition is conducive to optimizing the investor structure and improving the pricing efficiency of respective market.
According to the requirements of CSRC, CSDC will give full play to its function of financial infrastructure, actively cooperate with SZSE, HKMA, QAO and other relevant parties, and make a good effort in promoting the Mutual Recognition and the amalgamation of China’s and global capital markets, said Dai Wenhua, General Manager of CSDC.
At the symposium, the overall preparations and specific scheme for the service platform for the Mutual Recognition, and information about the Financial Data Exchange Platform (FDEP) of SSCC and the Central Moneymarkets Unit (CMU) of HKMA were also introduced. It is agreed that the unified service platform is good for reducing operational costs, bridging differences between regulations and practices on both sides and increasing operational efficiency for cross-border fund sales. Attendees highly appreciated the primary business scheme put forward by CSDC and SZSE, and gave many constructive advices based on their own demands on the service platform. Both CSDC and SZSE said they would further optimize the scheme based on the advices.