The Hong Kong Monetary Authority (HKMA), the People’s Bank of China (PBOC), and the Monetary Authority of Macao (AMCM) have jointly announced that they will implement a cross-boundary wealth management connect (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 the 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 regulators said.
North and south
The scheme will have a southbound and northbound components, depending on the residency of the investors, according to the three authorities.
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”.
Details to come
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.
During the scheme’s initial stage, its product scope will cover “mainly simple investment products of relatively low risk”.
The programme will also be subject to aggregate and individual investor quota management. However, the regulators did not disclose how much the quota will be.
“The aggregate quota will be adjusted through a macro-prudential coefficient,” they added.
Inclusion criteria
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 chief executive.
“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 our sister publication Fund Selector Asia.
There are 1,402 non-Hong Kong-domiciled SFC-authorised products with $1.5trn (£1.2trn, €1.3trn) in assets, which compares with the 763 Hong Kong-domiciled products with $106bn in assets, she said.
Additionally, 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.
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