China’s markets watchdog aims to enhance funds recognition scheme with Hong Kong to boost flows

Name: SCMP
Telephone: +852-2680-8888

Mainland’s top securities watchdog proposes amending funds recognition scheme with Hong Kong in latest move to boost cross-border trading

Reading Time:2 minutes

Why you can trust SCMP

The Stock Connect scheme was first launched in November of 2014 to link the Shanghai and Hong Kong exchanges. Photo: AFP

Yuke Xiein Beijing

Published: 10:33pm, 14 Jun 2024

Mainland China’s top securities watchdog has proposed amending a funds recognition scheme with Hong Kong in the latest move to boost cross-border trading and capital flow between the two markets.

The China Securities Regulatory Commission (CSRC) published a consultation paper on Friday on enhancing the mainland-Hong Kong mutual recognition of funds (MRF) scheme to provide investors with more choice. The mechanism was originally unveiled by the regulator on April 19 as one of five measures aimed at strengthening ties between the two, and to boost Hong Kong’s status as a global financial hub.

The paper is open to public consultation until July 14, according to the CSRC.

“[The proposed amendments] would address a long-standing wish of asset managers in Hong Kong for the scheme to be more flexible and to provide more diversified product choices to mainland investors as well as injecting new impetus into the continuous development of the MRF scheme,” said Julia Leung, chief executive officer of Hong Kong’s Securities and Futures Commission (SFC).

“The SFC will continue to work closely with the CSRC to formulate and implement the measures,” the city’s market watchdog said in a separate announcement on Friday.

Geared towards promoting the coordinated development of mainland China and Hong Kong’s capital markets, the five measures also included a plan to relax the eligibility criteria for exchange-traded fund (ETF) products in the Stock Connect mechanism that allows investors in the two regions to invest in each other’s markets.