Mainland-Hong Kong Mutual Recognition of Funds enhancements to take effect on 1 January 2025
The Securities and Futures Commission (SFC) welcomes the publication today of the revised Provisions on the Administration of Recognised Hong Kong Funds (《香港互認基金管理規定》) by the China Securities Regulatory Commission (CSRC) and also the revised operating guidelines jointly by the People's Bank of China and the State Administration of Foreign Exchange, for the purpose of implementing the enhancements to the Mutual Recognition of Funds (MRF) scheme. The SFC also published a revised Circular on Mutual Recognition of Funds between the Mainland and Hong Kong today. (Note 1)
Enhancement to the MRF scheme is one of the five measures on capital market cooperation with Hong Kong announced by the CSRC on 19 April 2024. For Hong Kong funds approved by the CSRC for public offering in Mainland (Hong Kong MRF Funds), the relaxation of the sales limit will increase their maximum potential sales value on the Mainland by three times. Also, the relaxation of overseas delegation restriction will provide more opportunities for international asset managers to leverage their expertise and extensive knowledge of global markets to offer more offshore solutions and products to Mainland investors.
“We are very pleased with the MRF enhancements which would expand the business potential for asset managers of recognised Hong Kong funds. We also feel confident that these enhancements will significantly increase the diversity as well as the scale of products under the MRF, thus injecting fresh momentum into the scheme,” said Ms Julia Leung, the SFC's Chief Executive Officer.
The MRF enhancements will be effective from 1 January 2025.
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Note:
1.The enhancements include: (i) relaxing the cap on the value of units of a recognised fund sold to investors in the host market from 50% to 80% of the fund's total assets; and (ii) allowing the delegation of investment management functions of recognised funds to overseas asset management companies within the same group. Hong Kong MRF Funds can delegate such functions to an overseas entity within the same group located in a jurisdiction that has entered into a memorandum of understanding on regulatory cooperation with the CSRC, whereas recognised Mainland funds can delegate such functions to an overseas entity within the same group located in a jurisdiction under the SFC's acceptable inspection regime.
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