The Hong Kong Monetary Authority (HKMA), the People’s Bank of China (PBOC), and the Monetary Authority of Macao (AMCM) yesterday jointly announced that they will implement a cross-boundary WMC pilot scheme in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA).
The scheme will be the third cross-border investment system between the mainland and Hong Kong, following stock and bond connect. It is also the first time that Macau is included in such programmes.
However, the announcement did not include when the scheme will be implemented, noting that implementation details will be announced separately.
“The date of the formal launch of wealth management connect and implementation details will be separately specified,” the statement said.
The scheme will have southbound and northbound components, depending on the residency of the investors, according to the statement. Under the southbound WMC, residents of mainland cities in the GBA can invest in eligible investment products distributed by banks in Hong Kong and Macao by opening designated investment accounts with these banks. Under the northbound wealth management connect, residents of Hong Kong and Macao can invest in eligible wealth management products distributed by mainland banks in the GBA by opening designated investment accounts with these banks.
The statement did not elaborate on which products are eligible in the scheme, only saying that they “will be governed by the respective laws and regulations on retail wealth management products applicable in the three places with due regard to international norms and practices”.
Authorities, including the PBOC, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, the HKMA, the Hong Kong Securities and Futures Commission (SFC) and the Monetary Authority of Macao will discuss and agree on the implementation details, including investor eligibility and scope of eligible investment products, it said.
It also noted that during the scheme’s initial stage, its product scope will cover “mainly simple investment products of relatively low risk”.
The scheme will also be subject to aggregate and individual investor quota management. However, the statement did not disclose how much the quota will be.
“The aggregate quota will be adjusted through a macro-prudential coefficient,” it said.
Separately, the Hong Kong Investment Funds Association (HKIFA) hopes that SFC-authorised funds will be included in the WMC scheme, according to Sally Wong, HKIFA’s CEO.
“We hope that most, if not all, SFC-authorised funds, instead of just Hong Kong-domiciled funds, should be within the scope of the WMC. More fund managers can participate in the schemes and greater competition will be in the best interests of investors,” she told FSA.
There are 1,402 non-Hong Kong-domiciled SFC-authorised products with $1.5trn in assets, which compares with the 763 Hong Kong-domiciled products with $106bn in assets, she said.
In a separate statement, HKIFA said that it will continue to work closely with the authorities and distributors on the operational details to ensure smooth implementation of the WMC.