Source: South China Morning Post
The Hong Kong government is working with the mainland securities regulator to seek mutual recognition of fund products sold in both markets to boost the local asset management industry.
Secretary for Financial Services and the Treasury Chan Ka-keung said yesterday that he gave the proposal to the China Securities Regulatory Commission during his visit to Beijing late last month.
Chan said no details or timing had been set but the CSRC was keen to study the project.
“The proposal, if it can be achieved, will mean all Hong Kong domicile funds would be
allowed to be sold in the mainland market, while all mainland funds would also be allowed to
be sold in Hong Kong,” he said.
“This will attract international fund companies that target mainland markets to come to Hong
However, he said this would be a long-term aim and a lot of policy and legal issues needed
to solved. China does not yet allow international funds to be freely sold domestically and has
capital controls. But, for a start, the mainland could introduce a quota system, Chan said.
There are several thousand mutual funds available in Hong Kong but they are mainly
incorporated in European centres such as Luxembourg and Dublin. Hong Kong-domiciled
funds account for less than 5 per cent of the total authorised funds.
Hong Kong requires overseas domiciled funds to receive authorization from the Securities
and Futures Commission before being sold to the public.
To incorporate in Hong Kong they must set up a trustee for the fund, something not required
in European jurisdictions.
Chan said he would like to see a change in the law to make it easier for these funds to
incorporate in Hong Kong to create more obs and business opportunities. Changes in the
law as well as the mutual recognition with China would attract overseas asset managers to
set up funds here, Chan said.