An opportunity to market HK-domiciled and authorized funds to Mainland retail investors is starting to take shape. There is keen expectation that this Scheme will finally go “live” in the second half of 2015. The Securities and Futures Commission (“SFC”) in Hong Kong has indicated that approximately 600 funds will likely qualify for participation in the Scheme: 500 being Mainland-domiciled and approved by the China Securities Regulatory Commission (“CSRC”), and 100 being Hong Kong-domiciled and SFC-authorised.
Hedge funds or funds that use derivatives will not be able to participate in the Scheme; which will only be available to plain vanilla bond and equities funds.
There will be a total quota will be assigned to the entire Scheme, with each participating fund in Hong Kong and the Mainland receiving individual quotas based on their respective assets under management. The Scheme is said to currently be awaiting approval from the State Council of the People’s Republic of China before the SFC and CSRC can sign a Memorandum of Understanding to implement the Scheme.
At this stage, no further details on the actual rules implementing the Scheme (e.g. eligibility, track record or AUM requirements) are available.