After 9 months of negotiations, the China Securities Regulatory Commission, the Hong Kong Securities and Futures Commission (SFC), and the State Administration of Foreign Exchange have reached a consensus on six aspects regarding the mutual recognition of funds between the mainland and Hong Kong. The mutual recognition framework is entering the "final sprint," and the implementation details will be announced soon. The regulatory authorities of both regions have achieved preliminary consensus on six major aspects, including the scope of mutual recognition funds, manager qualifications, mutual recognition approval procedures, fund investment management, information disclosure, and investor protection mechanisms.
It is reported that the managers of mutual recognition funds must hold a public fund license from the mainland or an asset management license from Hong Kong, and must be registered, managed, invested, and traded in both regions, subject to their respective regulatory laws. When mutual recognition funds are sold in different locations, they must comply with the regulatory requirements of the sales location and include "additional important local requirements" in their information disclosure. Once mutual recognition funds are established, mainland residents will be able to subscribe to funds "made in Hong Kong."
According to the framework agreement disclosed in advance, mutual recognition funds sold in the mainland market must be "made in Hong Kong." The investment, operation, and actual management of mutual recognition funds must take place in Hong Kong and be regulated by Hong Kong law and the SFC.
