China News Service, September 15th. According to the website of the People’s Bank of China, the People’s Bank of China and the Hong Kong Monetary Authority jointly issued an announcement stating that in order to promote the joint development of the mainland and Hong Kong bond markets, the People’s Bank of China and the Hong Kong Monetary Authority have decided to agree to China’s foreign exchange. Exchange Center (National Interbank Funding Center), China National Debt Depository and Clearing Co., Ltd., Interbank Market Clearing House Co., Ltd., custodian bank for qualified domestic institutional investors, and cross-border interbank payment and clearing company (hereinafter collectively referred to as Mainland Fundamentals) Service institutions) and Hong Kong Exchanges and Clearing Co., Ltd., the Hong Kong Monetary Authority’s debt instrument central clearing system, Hong Kong custodian bank (hereinafter collectively referred to as Hong Kong basic service institutions), etc. to carry out Hong Kong and the mainland bond market interconnection southbound cooperation (hereinafter referred to as "Southbound Pass").
"Southbound Link" will be launched on September 24, 2021.
The announcement made it clear that "Southbound Link" refers to the institutional arrangement for mainland institutional investors to invest in the Hong Kong bond market through the connection between the mainland and Hong Kong basic service institutions.
The announcement pointed out that "Southbound Link" is another important measure taken by the central government to support the development of Hong Kong and promote cooperation between the Mainland and Hong Kong. It will help mainland institutional investors have more investment channels and will help steadily promote the two-way opening of my country’s financial market. It will help Hong Kong improve its competitive advantages, consolidate its status as an international financial center, and maintain long-term prosperity and stability.
"Southbound Link" complies with the relevant laws and regulations of the mainland and Hong Kong bond markets, abides by the current Hong Kong bond market policy framework, and does not change the policy arrangements for mainland institutional investors to "go out" to invest in Hong Kong and the global bond market.
The specific rules of "Southbound Link" will be formulated separately.
The announcement requires that the mainland and Hong Kong bond market regulators each take all necessary measures to ensure that both parties establish an effective mechanism under the "Southbound Link" for the purpose of protecting the legitimate rights and interests of investors to deal with violations of laws and regulations in a timely manner.
The Mainland and Hong Kong bond market regulators have perfected the memorandum of supervisory cooperation, improved supervisory cooperation arrangements and liaison and consultation mechanisms, and maintained the stability of the financial market and fair transaction order.
The announcement also clarified that the mainland and Hong Kong basic service institutions should follow the principles of stability, order and risk control, and provide basic services for all parties in the market to participate in the “Southbound Link” in accordance with laws and regulations, and assist mainland institutional investors to fully understand the laws of the Hong Kong bond market. Regulations and business rules, prudently assess investment risks, and prepare for entry into the Hong Kong bond market.