Hong Kong’s Securities and Futures Commission (SFC) has agreed in-principle on hundreds of licensed brokerages in the city to participate in the cross-boundary scheme, according to Bloomberg.
The move will bring in more competition to banks which are already in the programme for an estimated $500m (HK$3.9bn) in annual fees.
The brokerages’ participation under WMC will be subjected to applications and other requirements, as well as the approval by mainland Chinese regulators, the news agency cited people familiar with the discussions.
WMC, which was officially launched in early September last year, allows eligible mainland, Hong Kong and Macau residents in the Greater Bay Area (GBA) to invest in wealth management products distributed by banks in each other’s market, through a closed-loop funds flow channel established between their respective banking systems.
It attracted some 13,000 individual investors in the first month.
A total of 23 banks have been approved for southbound services, allowing eligible investors on the mainland in the GBA to invest in eligible wealth management products distributed by banks in Hong Kong and Macau.
The quota for southbound and northbound schemes under WMC is set at RMB 150bn ($23.2bn) each. Individual investors can invest up to RMB 1m in investment products under WMC, according to the Hong Kong Monetary Authority.
Under current rules, eligible Hong Kong banks in the programme carry an SFC type 1 license to deal in securities and engage in retail banking or private banking business. There are 1,487 corporations, including brokers and asset managers, with the same license as of December 2021.
As of the end of 2021, over 5,800 transactions worth RMB 486bn ($76.5bn) took place in the northbound and southbound channels of the programme, according to the People’s Bank of China, Guangzhou Branch.
Almost one-third of the 22,000 investors who have participated in the scheme are from mainland provinces, such as Guangzhou, Shenzhen, Dongguan.
About 70% of the 14,000 northbound investors are Macau residents, while the remaining 30% are from Hong Kong, the central bank branch added.