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Operational Guidelines Issued for Cross-Border Fund Flows

The People's Bank of China and the State Administration of Foreign Exchange (SAFE) have earlier issued the Operational Guidelines for Funds Management in Cross-Border Issuance and Sale of Mainland and Hong Kong Securities Investment Funds to deepen mainland-Hong Kong financial cooperation, promote the common development of the mainland and Hong Kong capital markets, and support the mutual recognition of publicly-offered securities investment funds between the mainland and Hong Kong.

The following are some of the main points of the Guidelines: SAFE will monitor the total mutual recognition quota rather than give its approval for individual institutions or products. Funds raised through cross-border issuance of funds may flow between Hong Kong and the mainland in Renminbi and foreign currencies, and can be converted at banks by custodians or agents. Renminbi-denomination and cross-border settlement are encouraged for cross-border issuance and sales. Procedures of information reporting on mutual recognition of fund should be delegated to custodians (banks) or agents (banks or fund companies). A systems approach to information processing and reporting should be established to eliminate manual reporting and duplicate reporting.

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