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On January 8, 2016, the Work Meeting on Launching the Mainland China and Hong Kong Fund Mutual Recognition Service Platform was convened in Shenzhen. More than 100 distinguished guests from China Securities Regulatory Commission (“CSRC”), Securities and Futures Commission of Hong Kong (“SFC”), Hong Kong Monetary Authority (“HKMA”), Shenzhen Municipal Government, Shenzhen Stock Exchange (“SZSE”) and China Securities Depository and Clearing Co., Ltd. (“CSDC”) as well as fund companies, sales organizations, securities companies and trust institutions in Mainland China and Hong Kong were presented at the meeting. The distinguished guests witnessed the launch of the platform together, and carried out in-depth discussion and exchange on the operation and improvement of the platform and the development and perfection of Mainland China and Hong Kong fund mutual recognition mechanism.
CSRC and SFC started to accept applications for fund mutual recognition from Mainland China and Hong Kong fund managers from July 1, 2015 and formally register mutually-recognized funds from December 18, 2015. In order to coordinate the implementation of Mainland China and Hong Kong fund mutual recognition business, SZSE, CSDC, Shenzhen Securities Communication Co., Ltd. and HKMA jointly launched the fund mutual recognition platform under the support of CSRC and SFC as well as Shenzhen Municipal Government. The platform is connected with HKMA’s Central Money Market Units (“CMU”), related institutions in Mainland China and Hong Kong can realize data exchange, secondary registration and trusteeship and fund settlement for cross-border fund sales just by accessing to the platform from a single point. After several rounds of simulation tests, the platform has received enthusiastic response from market institutions, more than 60 Mainland China and Hong Kong institutions have participated in the tests of the platform as manager, general agency, sales organization or fund transfer agent. On December 5, 2015, the platform was officially launched. On December 29, 2015, China AMC Return Mixed Fund, as one of the first mutually-recognized fund product, was successfully sold in Hong Kong market through the fund mutual recognition service platform. On January 4, 2016, Xingjian Hongyang China Fund was successfully sold in Mainland China market through the fund mutual recognition service platform, which marks the successful two-way opening up of the fund mutual recognition service platform.
Ms. Song Liping, General Manager of SZSE, said at the meeting, Mainland China and Hong Kong fund mutual recognition is the opening up of service trade, China Capital Market has walked towards the opening up of higher level, which has important significance in expanding the investment channel for investors at home and abroad, providing diversified investment products and investment management services and promoting domestic fund management institutions to improve their market competitiveness. The interconnection of Mainland China and Hong Kong fund markets needs financial infrastructure as implementation guarantee. The fund mutual recognition service platform is the financial infrastructure for the interconnection of Mainland China and Hong Kong fund markets, which marks that Mainland China and Hong Kong fund markets have made substantive progress in financial infrastructure cooperation. Thanks to strong support from Mainland China and Hong Kong regulation departments and Shenzhen Municipal Government, joint efforts of all platform construction parties and active participation of market institutions, the fund mutual recognition service platform was successfully launched. After the smooth operation of the first phase, the platform will explore to connect with more overseas fund service platform, support Mainland fund managers to build TA mode and Hong Kong mutually-recognized funds to be purchased, redeemed and traded in SZSE, and optimize cross-border capital settlement function.
Mr. Dai Wenhua, General Manager of CSDC, said, it’s CSDC’s incumbent duties to ensure the efficient and safe operation of fund mutual recognition projects, protect the legal rights and interests of investors at home and abroad and support and serve the regulation institutions for fund mutual recognition. CSDC will follow the principles of interconnectivity and mutual benefits to sincerely cooperate with all parties, hand in hand, to fully support the smooth operation of the fund mutual recognition platform. Meanwhile, CSDC will continue to actively assist SZSE to launch projects such as Shenzhen-Hong Kong Stock Connect program, so as to provide more efficient and safer infrastructure support for the further expanding two-way opening up of capital markets.
Li Jianying, Assistant President of HKMA, said, fund mutual recognition, as an important policy for interconnection of Mainland China and Hong Kong capital markets, realizes safe, fast, reliable and actual implementation through the new financial infrastructure of fund mutual recognition service platform. It benefits far more than just the fund industries of both sides, but also investors of both sides. We hope more market participating institutions choose standard and automatic fund trading platform to reduce operation risks. In the future, all parties of the mutual recognition platform will improve the platform from many aspects, so as to bring better services and more contributions to the fund markets and industries of both sides.
Related officers of CSRC and SFC said, Mainland China and Hong Kong fund mutual recognition is another major measure for the implementation of two-way opening up strategy of Mainland capital market after Shanghai-Hong Kong Stock Connect program launched in 2014, which helps promote the deeply integration and development of Mainland China and Hong Kong capital markets. There are differences between the operation rules of fund industries of both sides, the “fund mutual recognition service platform” helps eliminate differences in fund business operation of both sides, so as to better serve fund investors of both sides at the same time of reducing the business costs of fund mutual recognition participating institutions of both sides. We hope the platform run smoothly, and we believe that more market participants will use the platform in the future.
As for the subsequent supervision and arrangement for the fund mutual recognition work, CSRC and SFC said that the following three works need to be well done: firstly, the daily supervision work after mutual recognition of funds should be well done, which mainly includes continuous monitoring of data statistics of mutually-recognized funds and enhanced supervision on sales behaviors and information disclosure of mutually-recognized fund products; secondly, the registration work of mutually-recognized fund products should be steadily pushed forward, CSRC and SFC will jointly evaluate and study on issues related with fund mutual recognition and gradually expand and enrich the types of mutually-recognized fund products after the operation of the first-batch mutually-recognized fund products for some time and accumulation of a certain experience; thirdly, the cooperation in fund mutual recognition regulation between CSRC and SFC should be strengthened. CSRC and SFC will maintain close communication and cooperation, strengthen market monitoring and information sharing, establish regular reporting mechanism on major information of fund products and managers and investigate all kinds of illegal behaviors in accordance with the law, so as to maintain the market fairness, openness and impartiality as well as investors’ legal rights and interests. They hope the platform continue to enrich its service contents according to the new requirements for development of fund mutual recognition, so as to better serve investors.
The presented industry representatives fully confirmed the fund mutual recognition service platform, they unanimously agreed that the platform helps eliminate the differences in fund business operation of both sides, reduce cross-border fund operation costs and enhance the operation efficiency of cross-border fund sales. They integrated their own needs and actual situation to provide many construction opinions on further improving the service platform and promoting the development of fund mutual recognition business.
