CSRC talks up mutual recognition

14 April 2014   Category: News, Asia, China, Global, Hong Kong   By Asia Asset Management

The China Securities Regulatory Commission (CSRC) is beefing up its efforts toward establishing a mutual recognition initiative between Hong Kong and China, according to Xiao Gang, chairman of CSRC.

Speaking at the Boao Forum for Asia Annual Conference 2014 on April 10, Mr. Xiao told media that the preparations for mutual recognition are in the final stages, saying the scheme would provide a more convenient wealth management channel for Mainland and Hong Kong investors.

The introduction of Hong Kong-domiciled funds to China will generate healthy competition and improve the quality and returns of PRC fund products. In return, it will enable Hong Kong to develop as an international platform for the overseas distribution of Mainland funds. It will also encourage deeper cooperation between the two systems in terms of governance and supervision, Mr. Xiao explained.      

As for the qualified foreign institutional investor (QFII) scheme, Mr. Xiao said the CSRC would be looking at ways in which to increase its capacity and broaden its investment scope. In doing so, he says the CSRC would streamline the QFII approval process and improve the efficiency of it.   

Mr. Xiao said he believes the mutual fund recognition pilot scheme and the soon-to-be-introduced mutual stock market access will complement each other and bring more overseas capital to the Mainland stock market. RQFII and QFII fund investment only accounts for about a 1.6% share of A-share market at the moment.