Mutual recognition of funds between the Mainland and Hong Kong will be officially launched on July 1st, and the China Securities Regulatory Commission will also answer the frequently asked questions under the mutual recognition arrangement of funds, including 24 questions, and explain the application conditions and application procedures.
the initial investment quota for mutual recognition of funds is 3 billion yuan (RMB, the same below) in and out of both markets. The requirements to be met by mainland funds intending to sell in Hong Kong include that the funds are established, managed and operated in accordance with mainland laws and regulations and their constituent documents; The fund is a publicly offered securities investment fund registered by the China Securities Regulatory Commission according to the Securities Investment Fund Law of the People's Republic of China; The fund must have been established for more than one year; The asset size of the fund shall not be less than RMB 2 million yuan or equivalent foreign currency; The fund shall not take the Hong Kong market as the main investment direction, and the sales scale in Hong Kong shall not account for more than 5% of the total assets of the fund.
The China Securities Regulatory Commission explained that the graded funds and capital preservation funds in the mainland market will not be included in the scope of mutual recognition for the time being. If the mainland mutual recognition fund is a new type of share for Hong Kong investors, the fund manager needs to modify the fund contract, prospectus and other documents accordingly, disclose the possible risks to investors, perform appropriate procedures and report to the China Securities Regulatory Commission.
Mainland funds usually apply different redemption rates according to the holding period, while Hong Kong generally does not charge or charge a fixed redemption fee. Regarding this difference, the China Securities Regulatory Commission indicated that mainland funds can be sold to investors in Hong Kong by setting up a single class of shares, and the fixed redemption rate is applied, which is included in the fund assets according to law.
The sales data of mainland funds are transmitted electronically. The CSRC pointed out that the Hong Kong sales organizations of mutual recognition funds in the Mainland can also apply for the sales organization code from their designated institutions.
Similarly, Hong Kong funds that intend to sell in the mainland market must meet six requirements, namely, Public Offering of Fund registered in Hong Kong (that is, holding the No.9 license plate of the CSRC) has been established for more than one year; Its assets are not less than HK$ 25 million; The China market shall not be the main investment direction, and the scale of sales in the Mainland shall not exceed 5% of the total assets of the fund.
The detailed explanation released by the China Securities Regulatory Commission further points out that the scale of assets applied by Hong Kong funds refers to the scale of funds when they apply for pilot projects. At the same time, in the initial stage of mutual recognition of funds, the China Securities Regulatory Commission will not limit the number of mutual recognition funds that each fund can apply for. In principle, all funds can apply if they meet the requirements.
In terms of information disclosure, mainland and Hong Kong investors should be treated equally in principle. Therefore, announcements for Hong Kong investors in accordance with Hong Kong laws and regulations should also be provided to mainland investors in simplified Chinese. At the same time, any product announcement submitted to the Hong Kong Securities Regulatory Commission should also be submitted to the China Securities Regulatory Commission.
in terms of specific subscription and redemption, the cross-border mutual recognition fund shares can only be opened for subscription and redemption when the mainland and Hong Kong are both working days, but it shall not affect the relevant rights of investors when the mutual recognition fund is sold in the original region. In addition, mainland fund management companies, as agents of Hong Kong mutual recognition funds, can sell the Hong Kong mutual recognition funds they represent. Hong Kong mutual recognition fund managers should entrust agents to exchange data with sales organizations through the technical platform designated by China Securities Regulatory Commission (central exchange platform for fund registration data) to complete the backup of fund share registration data.
As the mutual recognition plan requires that the sales scale of Hong Kong funds in the Mainland should not exceed 5%, the China Securities Regulatory Commission pointed out that fund managers should monitor and early-warning the purchase and redemption data to ensure that the requirements of the sales proportion in the Mainland can be continuously met. When the share of fund sales in the mainland is close to the upper limit of 5%, the fund manager should take necessary measures to manage and control and disclose it to investors. If it exceeds 5%, the manager shall fulfill the reporting obligation according to law and suspend the sales of the fund in the Mainland.