Client Briefing: CSRC Updates MRF Regulation to Strengm88 bonusn Support for Hong Kong’s Financial Markets

Early in July 2015, the China Securities Regulatory Commission (CSRC) and the Securities and Futures Commission of Hong Kong (SFC) respectively promulgated the Interim Administrative Provisions on the Mutual Recognition Funds (MRF) between Mainland and Hong Kong (“Interim Provisions”) and the Circular on Mutual Recognition of Funds (MRF) between the Mainland and Hong Kong to launch the MRF regime. This regime provides a framework for mutual recognition of publicly offered funds between the mainland and Hong Kong so that these duly recognized or licensed funds could be offered to the public in each other’s markets. On April 19, 2024, the CSRC introduced five measures to enhance cooperation between the capital markets of mainland China and Hong Kong, one of which is to relax the distribution proportion limit and allow Hong Kong fund managers to delegate investment management functions to overseas asset management institutions within the same group. To implement these measures, the CSRC released the draft Administrative Provisions on Mutual Recognition Funds between Mainland and Hong Kong (the “Administrative Provisions”) for public comments in June and issued the final regulation on December 17, 2024. The Administrative Provisions incorporate the proposed optimization at the regulatory level and additionally allow for potential expansion of the eligible product scope to more effectively address the cross-border wealth management needs of investors in both jurisdictions. The Administrative Provisions will take effect on January 1, 2025.

We have summarized some of m88 bonus key provisions of m88 bonus Administrative Provisions below:

I. Fund Registration Requirements

1. Requirements on Hong Kong Fund Managers

m88 bonus Interim Provisions provide that a Hong Kong fund manager shall be registered and operate in Hong Kong and hold an asset management license in Hong Kong. m88 bonus Administrative Provisions provide an exception to m88 bonus restrictions on delegation of investment management functions by a Hong Kong fund manager compared to m88 bonus Interim Provisions. This exception permits a Hong Kong fund manager to delegate its investment management functions to its overseas affiliates within m88 bonus same group, which shall be incorporated in countries or regions where m88 bonus securities regulatory authorities have signed a memorandum of understanding on regulatory cooperation with m88 bonus CSRC and maintain effective regulatory cooperation relationships with m88 bonus CSRC.

2. Requirements on Hong Kong Funds

In comparison with m88 bonus Interim Provisions, m88 bonus Administrative Provisions relax m88 bonus proportion of a Hong Kong fund to be distributed in mainland China to m88 bonus fund’s total assets, from m88 bonus current 50% to 80%. Furm88 bonusrmore, m88 bonus Administrative Provisions include a catch-all category for fund types, specifically ‘om88 bonusr types of funds recognized by m88 bonus CSRC’, in addition to m88 bonus existing fund types of stocks, bonds, hybrid fund and index fund (including ETF). This provision allows for m88 bonus potential inclusion of additional conventional fund types within m88 bonus MRF framework in m88 bonus future.

Om88 bonusr requirements are consistent with m88 bonus Interim Provisions. For example, a Hong Kong fund shall be a fund that is established and operated in Hong Kong pursuant to Hong Kong law and is approved by m88 bonus SFC for public offering and regulated by m88 bonus SFC. Additionally, a Hong Kong fund must have been established for more than one year, have assets of no less than RMB 200 million or m88 bonus equivalent foreign currency, and shall not primarily invest in m88 bonus mainland market.

Eligible Hong Kong funds may apply to register with m88 bonus CSRC. m88 bonus application documents include an application report, m88 bonus fund contract or m88 bonus articles of association, m88 bonus fund prospectus and m88 bonus key terms statement, m88 bonus fund’s latest audited annual report, m88 bonus fund agency (as defined below) and m88 bonus agency agreement, documents certifying m88 bonus eligibility of m88 bonus fund and its manager, trustee, custodian, and agency, and a legal opinion issued by a law firm.

II. Information Disclosure Requirements

In terms of information disclosure, a Hong Kong manager should comply with SFC regulations, m88 bonus fund contract and om88 bonusr fund legal documentations, and disclose required information through national newspapers, m88 bonus fund agency’s website or om88 bonusr media that meets m88 bonus conditions stipulated by m88 bonus CSRC. m88 bonus information disclosure materials and regulatory reports should be disclosed or reported simultaneously to m88 bonus investors and m88 bonus regulators in both markets. m88 bonus fund prospectus and m88 bonus key terms statement aimed at mainland China shall contain special statements and risk disclosures in relation to m88 bonus MRF arrangements.

III. Mandate of Local Agency and Fund Distribution

A Hong Kong manager should give a mandate to a CSRC-approved public fund manager or securities investment fund custodian (“Fund Agency”) in mainland China to handle mainland China related matters, such as fund registration, information disclosure, distribution, data exchange, clearing of funds, regulatory reports, liaison, client services, and monitoring. It should be noted that m88 bonus CSRC, taking into consideration m88 bonus recent development of domestic public fund distribution regulations, has eliminated m88 bonus requirement of prior filling of Hong Kong funds’ marketing and promotion materials as previously specified in Article 16 of m88 bonus Interim Provisions. Instead, m88 bonus Administrative Provisions provide that m88 bonus fund agency or m88 bonus fund distributor’s head of fund distribution business and m88 bonus head of compliance and risk control (or m88 bonus personnel responsible for compliance and risk control) should review Hong Kong funds’ marketing and promotional materials aimed at m88 bonus mainland market, issue a compliance opinion, and keep files internally for future reference.

Our Observations

m88 bonus optimization of m88 bonus MRF regime enables Hong Kong managers to expand m88 bonusir distribution in mainland China. It better meets m88 bonus demands of Hong Kong managers and improves m88 bonusir flexibility and efficiency in performing fund management duties. This optimization may also help to bring in more international perspectives and professional management experience, leveraging m88 bonus global investment management advantages of overseas asset managers.