.jpg)
China Securities Regulatory Commission and Hong Kong Securities and Futures Commission jointly announced on May 22 that the Mutual Recognition to Cross-border Funds (hereinafter referred to as “the Mutual Recognition”) will be put into implementation on July 1, 2015.
Due to the large number of institutions involved in the Mutual Recognition and the open system and difficulties in operation and supervision, China Securities Depository and Clearing Co., Ltd. (hereinafter referred to as “CSDC”), Shenzhen Stock Exchange (hereinafter referred to as “SZSE”) and Hong Kong Monetary Authority (hereinafter referred to as “HKMA”) have decided to realize the interconnection and interworking between two markets via platform connectivity. Based on a good understanding of both markets, the Data Exchange Protocol for Cross-border Trading has been issued as the technical standard for the Mutual Recognition. The infrastructure services include data transmission for cross-border fund sales, fund-share registrar, nominee holding, cross-border capital settlement, information disclosure, online signing, floor trading, etc. Only with system improvement and platform connectivity among CSDC, SZSE and HKMA, can cross-border data and capitals be transferred in a safe, compliant and efficient manner. Market players on both sides can keep their existing trading habits unchanged, and there’s no need to establish complicated interface for data or capital between institutions in different markets.
Song Liping, President and CEO of SZSE said that as another important arrangement for two-way opening-up of capital markets, the Mutual Recognition is different from Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect. It is not only capital connection between the mainland and Hong Kong, but also an important move for opening-up of services and trades in the mainland, which is conducive to the further deepening of cooperation between both capital markets. Since the year of 2014, SZSE has been collaborating with CSDC and HKMA to work out the scheme for the Mutual Recognition and system construction. Shenzhen Securities Communication Co., Ltd., a subsidiary of SZSE, will provide data communication and other diversified services for the cross-border fund sales.
CSDC has always been committed to providing high-efficient, convenience and low-cost infrastructure services to the fund industry, said Dai Wenhua, General Manager of CSDC, the fund sales in the mainland has been centralized on the Fund Central Data Exchange Platform. For the Mutual Recognition, CSDC will stick to the principles of serving and facilitating the fund industry. Without making any changes by domestic fund companies or sales agents, Hong Kong fund companies and sales agents or the CMU Platform of HKMA can access to the Fund Central Data Exchange Platform so that trading data will be automatically transferred. Meanwhile, CSDC will also provide fund-share registrar, nominee holding, cross-border capital settlement and other services for the Mutual Recognition.
Peter Pang, Deputy Chief Executive of HKMA said that the CMU Platform of HKMA is an important infrastructure of the standardization services of the fund industry in Hong Kong. On such basis, HKMA is actively collaborating with CSDC and SZSE to provide financial infrastructure services for the Mutual Recognition. The CMU Platform of HKMA will connect with the Fund Central Data Exchange Platform in mainland to provide fund purchase, fund redemption, fund conversion and capital settlement for the Mutual Recognition.
The co-working mechanism among CSDC, SZSE and HKMA has been established and will soon provide services for the industry. It is expected that more and more innovative and high-efficient services will be provided so as to lay a solid foundation to the infrastructure of cross-border capital markets.
