On 22 May 2015, the securities and futures commission of Hong Kong (SFC) and the China securities regulatory commission (CSRC) signed the memorandum of regulatory cooperation on mainland-Hong Kong mutual recognition of funds (MRF). This memorandum will allow eligible mainland and Hong Kong funds to be distributed in each other’s markets through a streamlined vetting process. The scheme will be implemented on 1 July 2015.
Looking back, the MRF emerged in November 2012 when the SFC submitted a proposal to the mainland for developing a mutual platform for locally domiciled funds in Hong Kong and mainland China. Back then, the SFC described this initiative as a substantial breakthrough and the forthcoming MRF would be “Asia’s largest and deepest”. By December 2013, the SFC and the CSRC jointly disclosed that they were in the final stretch of the MRF.
With the successful launch of the Shanghai-Hong Kong stock connect in November 2014, and the positive market response, the recent announcement of the MRF is seen as another breakthrough in the liberalization of the mainland’s financial market. It offers more investment options for both the mainland and Hong Kong investors to access unparalleled capital markets.