Mainland China briefing: regulators of mainland China, Hong Kong and Macau introduce cross-boundary wealth management scheme

On 29 June 2020, the People’s Bank of China (PBOC), the Hong Kong Monetary Authority (HKMA), and the Monetary Authority of Macao (AMCM) jointly published an announcement on the launch of the cross-boundary wealth management connect pilot scheme (Wealth Management Connect) in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) (the announcement is available here in English and here in Chinese).

Similar to the northbound and southbound components of the Stock Connect schemes, under  Wealth Management Connect, individual residents of the mainland cities of the GBA will be able to invest in eligible investment products distributed by banks in Hong Kong and Macau by opening designated investment accounts with such banks (referred as Southbound Wealth Management Connect). Individual residents of Hong Kong and Macau can invest in eligible wealth management products distributed by banks in the mainland cities of the GBA by opening designated investment accounts with these banks (referred to as Northbound Wealth Management Connect).

The announcement further states that cross-boundary fund flows under the Southbound and the Northbound Wealth Management Connect schemes will be subject to aggregate and individual investor quota management. The cross-boundary remittance under Wealth Management Connectwill be conducted and managed in a closed-loop through the bundling of designated remittance and investment accounts to ensure that the relevant funds will only be used to invest in eligible investment products. It is also worth noting that Wealth Management Connect will be governed by the respective laws and regulations on retail wealth management products applicable in mainland China, Hong Kong and Macau, with due regard to international norms and practices.

The introduction of Wealth Management Connect is another important measure to facilitate cross-boundary investment by individual residents in the GBA, and strengthen the financial corporation between mainland China, Hong Kong and Macau, following the issuance of the Opinions on Providing Financial Support for the Development of the Guangdong-Hong Kong-Macao Greater Bay Area in May 2020.

Wealth Management Connect will also promote the opening-up of the financial markets of mainland China. Currently, the cross-boundary access channels into mainland China include: Qualified Foreign Institutional Investor scheme, Renminbi Qualified Foreign Institutional Investor scheme, Stock Connect schemes (including Shang­hai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect), Bond Connect scheme, and Mainland-Hong Kong Mutual Recognition of Funds scheme.

The formal launch date and implementation details of Wealth Management Connect have not been released. Details such as the investor eligibility and scope of eligible wealth management products will be discussed and agreed by relevant regulators in mainland China, Hong Kong and Macau (including the PBOC, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange, the HKMA, the Securities and Futures Commission, and AMCM). We will monitor progress and share developments.