At the initial stage, only regular equity funds, bond funds, mixed funds, unlisted index funds and physical index-tracking exchange traded funds will be eligible for the MRF scheme.
The SFC and the CSRC may consider extending the MRF scheme to include other types of products in future.
Mainland fund managers that wish to apply for SFC authorization of their funds for distributing in Hong Kong have to meet the following requirements:
- the fund is established and managed and operates in accordance with Mainland laws and regulations and its constitutive documents;
- the fund is a publicly offered securities investment fund registered with the CSRC under the Securities Investment Fund Law of the People's Republic of China;
- the fund must be established for more than one year;
- the fund must have a minimum fund size of not less than RMB200 million or its equivalent in a different currency;
- the fund must not primarily invest in the Hong Kong market; and
- the value of shares/units in the fund sold to investors in Hong Kong shall not be more than 50% of the value of the fund’s total assets.
Likewise, SFC-authorized Hong Kong domiciled funds managed by SFC-licensed managers in Hong Kong that seek to enter the Mainland market should also meet similar corresponding criteria set out by the CSRC.
According to preliminary estimation, around 850 Mainland funds are eligible to apply for SFC authorization for offering in Hong Kong and around 100 Hong Kong funds are eligible for applying to be marketed in the Mainland. It is generally expected that the first batch of Mainland funds authorized by the SFC (Recognised Mainland Funds) will be offered in Hong Kong in Q3 or Q4 2015.
How can I find out if a fund is a Recognised Mainland Fund under the MRF? Where can I find more information about Recognised Mainland Funds?
The SFC maintains a repository of all authorized investment products (including funds) offered to the public in Hong Kong. Apart from the name and issuer of the products, the repository also provides full set of offering documents (including the Product Key Facts Statements which set out the key features and risks of the products). The SFC added a new category in the repository for Recognised Mainland Funds to help investors identify this type of products. See the List of Investment Products
Recognised Mainland Funds will also maintain a website for Hong Kong investors. The website may contain information such as offering documents, circulars, notices, announcements, financial reports and the latest available offer and redemption prices or net asset value of the Recognised Mainland Funds. Please refer to the Hong Kong offering documents as to the means where this information will be made available to Hong Kong investors.
What are the key differences between Recognised Mainland Funds and other SFC-authorized funds?
|Recognised Mainland Funds||Other SFC-authorized funds|
|Types of funds||Regular equity funds, bond funds, mixed funds, unlisted index funds and physical index-tracking exchange traded funds||Not confined to specific types of funds so long as it complies with the requirements in the Code on Unit Trusts and Mutual Funds (UT Code)|
|Geographical investment restriction||Must not primarily invest in the Hong Kong market||No specific geographical investment restriction so long as it complies with the UT Code requirements|
|Eligibility requirements (for example, requirements on minimum fund size, track record and Hong Kong investor participation)||Yes||No such requirement so long as the fund complies with the UT Code|
|Disclosure frequency of financial reports||Annual, interim and quarterly reports||Annual and interim reports|
|Language requirement for constitutive documents and financial reports||Simplified Chinese (Upon request, specific information should be made in English and/or traditional Chinese)||English for constitutive documents
English and/or Chinese for financial reports
|Redemption fee||Fixed redemption fee||No specific requirement|
What are the key differences between Recognised Mainland Funds and SFC-authorized RQFII funds?
Both Recognised Mainland Funds and SFC-authorized RQFII funds invest in the Mainland capital market. But they are different in the following aspects:
|Recognised Mainland Funds||SFC-authorized RQFII funds|
|Quota||There is an aggregate quota for the MRF scheme which applies to whole market in respect of in and out fund flows but no individual quota at management firm level||Quota at both RQFII programme level in aggregate and individual RQFII licence holders level to make investments directly in the Mainland securities markets|
|Manager||CSRC-licensed management firms||Qualified SFC-licensed management companies such as fund companies with major operation in Hong Kong and subsidiaries of Mainland fund/securities/insurance/banking companies.|
|Underlying investments||Direct investment in the Mainland securities markets without any quota requirement.||Direct investment in the Mainland securities markets through RQFII investment quota|
|Local investor participation||Value of shares/units in the Recognised Mainland Funds sold to investors in Hong Kong shall not be more than 50% of the value of the Recognised Mainland Fund’s total assets||No restriction|