The People’s Bank of China, the Hong Kong Monetary Authority, and the Monetary Authority of Macao have implemented a pilot scheme called the Wealth Management Connect to facilitate cross-boundary investment by individual residents in the Guangdong, Hong Kong and Macao Greater Bay Area (GBA).
The scheme has a southbound and a northbound components, depending on the residency of the investors. Under Southbound Wealth Management Connect, residents of the 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 scheme is an important measure by the nation in support of the GBA development and closer financial cooperation in the region. It promotes the opening-up of the Mainland’s financial markets as well as the mutual social and economic development.
It 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. The regulators from China, Hong and Macao will discuss and agree on the implementation details including investor eligibility, mode of investment, scope of eligible investment products, investor protection, handling of disputes, etc.
Cross-boundary remittance under the scheme will be conducted and managed in a closed-loop through the bundling of designated remittance and investment accounts to ensure that the relevant funds will only be used to invest in eligible investment products.
The remittances will be carried out in renminbi, with currency conversion conducted in the offshore markets. Fund flows under Northbound and Southbound Wealth Management Connect will be subject to aggregate and individual investor quota management. The aggregate quota will be adjusted through a macro-prudential coefficient.
Relevant regulators will each take necessary measures to establish effective mechanisms under Wealth Management Connect to tackle, based on the principle of territorial administration, any illicit activities in a timely manner, with a view to protecting the interest of investors.
They will enter into memoranda of understanding on supervisory cooperation to establish robust supervisory cooperation arrangement and liaison mechanism in order to protect investors’ interest and maintain orderly and fair trading.
The Wealth Management Connect pilot scheme will be formally launched once relevant rules and systems are in place.
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