At a seminar hosted by the Hong Kong Securities Institute on 23 January 2013, Mrs Alexa Lam, Deputy CEO of Hong Kong's Securities and Futures Commission (SFC), confirmed that the SFC and the China Securities Regulatory Commission (CSRC) are working together towards a mutual recognition status for fund products sold in Hong Kong and Mainland China. In due course, China will be added to the SFC's list of mutually recognised jurisdictions.
Quoting from Mrs Lam's speech, mutual recognition simply means that “qualified SFC-authorized funds domiciled in and operating from Hong Kong would enjoy the status of 'recognised Hong Kong funds', and qualified Mainland funds would enjoy the status of 'recognised Mainland funds'. These recognised funds could then obtain authorization and be sold directly in the other's market.”
The SFC and the CSRC are working diligently in designing a streamlined process for the approval of mutually recognised fund products, and many fund houses eagerly await the green light from the two regulators. This will be a very exciting breakthrough creating new business opportunities for both Hong Kong and Mainland fund management companies. At the same time, mutual recognition will also open up a new gateway for international players, prompting them to set up operations and funds in Hong Kong.
A Hong Kong domiciled platform facilitates meeting local standards and disclosure requirements, and may open up other opportunities for product issuers. In addition to the upcoming mutual recognition scheme, an Approved Pooled Investment Fund for sale to MPF (mandatory provident fund) local retirement schemes needs to be Hong Kong domiciled. Also, as real estate properties are no longer eligible investments for the Hong Kong Immigration Department's Capital Investment Schemes, fund houses are setting up and registering their Hong Kong domiciled fund products for such purposes.
The SFC's announcement and Mrs Lam's speech is available on the SFC website.
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