LCQ6: Cross-boundary Wealth Management Connect Scheme in the Guangdong-Hong Kong-Macao Greater Bay Area

During a session of the Legislative Council on November 29, 2023, Mr. Christopher Hui, Secretary for Financial Services and the Treasury, provided answers to a number of questions raised by Parliament members in connection with the announcement of upcoming enhancements to the Wealth Management Connect (WMC) scheme to expand the list of eligible products that may be traded in the Guangdong-Hong Kong-Macao Greater Bay Area and the scope of firms that may participate in the scheme (EventID 23120). These questions primarily sought clarifications on
1. the upcoming eligibility requirements of securities firms to participate in Wealth Management Connect,
2. the product scope extension, in particular, whether or not „stocks, exchange traded funds, futures, precious metals and derivatives“ will be included in the WMC, and
3. measures the Hong Kong government intends to take to expand the scope of financial institutions to participate in the scheme.
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Below, there’s a brief summary of question 1. Unfortunately, the other questions were not really answered in the statement:
(1) Upcoming eligibility requirements of securities firms to participate in Wealth Management Connect: The government and particularly the Securities and Futures Commission (SFC) are currently reflecting on criteria such as the need to be a licensed corporation, specific capital size, experience, and transaction volume requirements, along with obligations as regards the existence of internal systems and supervision arrangements to ensure proper monitoring.
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Instead, however, Mr. Hui provided various statistics on the current scope of business under the WMC, including the following:
– Northbound eligible products currently include low- to medium-risk public securities investment funds, fixed income, and public equity wealth management products issued by Mainland companies.
– Southbound eligible products currently comprise deposits, bonds, and SFC-authorized funds domiciled in Hong Kong rated as low- to medium-risk and non-complex by Hong Kong banks.
– As of end-October 2023, Mainland investment products held by Hong Kong and Macao investors under the scheme totaled RMB 227 million, including RMB 75 million in investment fund investments.
– Investment products of Hong Kong and Macao held by Mainland investors under the WMC totaled around RMB 2.351 billion, including investment funds (RMB28 million), bonds (RMB 6 million), and deposits (RMB 2.317 billion).