Recently, the Guangdong Branch of the People's Bank of China, the Guangdong Supervision Bureau of the State Administration of Financial Supervision, and others jointly issued the newly revised "Implementation Rules for the "Cross-Border Wealth Management Connect" Business Pilot in the Guangdong-Hong Kong-Macao Greater Bay Area.
It is understood that the "Cross-border Wealth Management Connect" business will be launched in 2021. This revision is called the upgraded version of "Cross-border Wealth Management Connect" in the industry and involves the scope of participating institutions, scope of qualified investment products, and individual investor quotas for investor access conditions. Optimization and adjustment in other aspects will be conducive to the expansion of the "Cross-border Wealth Management Connect" business scale.
Rules are getting upgraded
The "Cross-border Wealth Management Connect" business refers to the closed-loop capital channel established by mainland and Hong Kong and Macao investors in the Guangdong-Hong Kong-Macao Greater Bay Area through the financial institution system in the area to cross-border invest in eligible investment products sold by counterparty financial institutions.
Currently, the "Cross-border Financial Management Connect" is divided into "Northbound Access" and "Southbound Access".
Among them, "Northbound Connect" refers to Hong Kong and Macao investors opening personal investment accounts in mainland sales agencies in the Guangdong-Hong Kong-Macao Greater Bay Area, and remitting funds through closed-loop capital channels to purchase investment products sold by mainland sales agencies; "Southbound Connect" refers to Guangdong, Hong Kong and Macao Mainland investors in the Greater Bay Area open personal investment accounts with sales agencies in Hong Kong and Macau and remit funds through closed-loop capital channels to purchase investment products sold by sales agencies in Hong Kong and Macau.
As of the end of 2023, a total of 67 banks and 69,200 investors in the Guangdong-Hong Kong-Macao Greater Bay Area have participated in the pilot, and a total of 12.81 billion yuan of related fund transfers have been processed.
The relevant person in charge of the Guangdong Branch of the People's Bank of China said that since the pilot, the "Cross-border Wealth Management Connect" business has developed steadily.
In order to further meet the market demand for cross-border financial management in the Greater Bay Area, the "Implementation Rules" have been revised and further optimized based on the focus issues of all participants and the difficult issues reported by banks and other financial institutions, so that more market participants can enjoy "Cross-border Wealth Management Connect" policy bonus.
Wang Wei, a researcher at the Greater Bay Area Financial Research Institute of the Shenzhen Branch of the Bank of China, believes that the "Implementation Rules" comprehensively consider the demands of investors who received a lot of feedback on the "Cross-border Wealth Management Connect" during the early pilot operation. Optimization and adjustments have been made in terms of business access thresholds, individual investor quotas, and expanded pilot scope.
Specifically, this adjustment and optimization mainly includes three aspects.
The first is to further optimize the access conditions for investors to participate in business pilots.
Adjust the participation conditions for mainland investors in the "Southbound Link" business, lower the participation threshold, and add the optional condition "average annual income of not less than 400,000 yuan in the past three years" for mainland investors to support more Greater Bay Area residents Participate in the pilot and increase the investment limit of a single investor from RMB 1 million to RMB 3 million.
The second is to expand the scope of the "Cross-border Wealth Management Connect" business pilot in all aspects, increase the participation of securities companies in the pilot, and at the same time include the RMB deposit products of mainland banks and the "R4" risk level public securities investment funds (not included in the "Northbound Connect"). Including commodity futures funds) are included in the scope of qualified investment products to better meet the diversified investment needs of residents in the Greater Bay Area.
The third is to further optimize the publicity and sales arrangements for the "Cross-border Wealth Management Connect" business, refine and clarify the business conduct regulations of domestic sales institutions and domestic cooperative institutions, and guide financial institutions to provide high-quality financial services to residents of the Greater Bay Area.
New investment products emerge
After the "Implementation Rules" are officially implemented, what investment products can investors purchase?
Judging from the scope of investment products of the new version of "Cross-border Wealth Management Connect", the "Northbound Connect" investment products mainly include RMB deposit products of banks sold in the mainland; Mainland financial management companies (including bank financial management subsidiaries and foreign-controlled joint venture financial management companies) are based on the financial management business Fixed-income and equity-based publicly offered financial products (excluding cash management financial products) issued under relevant management measures and rated as "Level 1" to "Level 3" risk levels by issuers and mainland sales agencies; etc.
"Southbound Trading" investment products are regulated by the Hong Kong and Macao regulatory authorities. For details, please refer to the detailed rules promulgated by the Hong Kong and Macao financial regulatory agencies.
Bank of China, China Merchants Bank, Standard Chartered Bank and many other banks have responded to the "Implementation Rules" and have launched a number of new products in recent days.
For example, Bank of China Hong Kong has launched the "Cross-border Wealth Management Connect" deposit product. The annual interest rate for a 1-month RMB time deposit is 6%, and the annual interest rate for a 3-month RMB time deposit is 5%; China Merchants Bank's "Cross-border Wealth Management Connect" except funds In addition to free cross-border remittances and one-stop opening of "Southbound Link", the product set is more abundant. The number of "Northbound Link" fund products has increased from 48 to 156, and the number of "Southbound Link" fund products has increased from 110 to 110. The number has only increased to 205; Standard Chartered Bank has launched a number of new products under "Southbound Trading" and "Northbound Trading" respectively. "Southbound Trading" financial products have increased to nearly 550, covering medium and high risks, including funds that mainly invest in the stock market. and low- to medium-risk bonds, while the “Northbound Connect” has added RMB deposit products and more than 40 publicly offered securities investment funds with a risk rating of “R4”.
Investor Ms. Cheng said that after the new version of "Cross-border Financial Management" was launched, she has been paying attention to new products that can be purchased.
The upgrade of "Cross-border Wealth Management Connect" has further broadened the scope of investable products, helping to better allocate assets.
Experts said that since the launch of "Cross-border Wealth Management Connect" in 2021, it has met the needs of investors to a certain extent. The new version of "Cross-border Wealth Management Connect" will better meet the needs of high-net-worth investors and become an important part of the construction of the financial interconnection system in the Greater Bay Area. and important support for the development of the wealth market.
Since Shenzhen and Hong Kong resumed normal customs clearance in early February 2023, the "Cross-border Wealth Management Connect" business has shown rapid growth.
Among financial products, due to the dual impact of US dollar interest rate hikes and overseas deposit interest rates being higher than domestic ones, the "Southbound Connect" deposit product is very popular among investors.
After the new version of "Cross-border Wealth Management Connect" is launched, the product appeal will be further enhanced, and the investor customer base and business scale are expected to reach a new level, promoting the accelerated development of financial interconnection and cross-border wealth management market in the Greater Bay Area.
Protect investors well
Protecting investors in the "Cross-border Financial Management Connect" business is one of the focuses of this optimization of the "Implementation Rules".
The "Implementation Rules" clarify that mainland sales institutions should conduct sales management in accordance with the requirements of relevant financial management departments, strengthen investor suitability management, and match investors' risk tolerance with the risk levels of investment products.
Wang Wei said that in the business practice of "Northbound Link" and "Southbound Link", more attention should be paid to the protection of consumer rights of Hong Kong, Macao and mainland investors.
Due to the different legal and financial environments in the two places, all parties involved in the pilot need to do a good job in publicity and explanation, and further strengthen the protection of consumer rights and interests. In terms of cross-border transmission and use of information, they should pay attention to abide by relevant laws and regulations, and do a good job in customer information, privacy and Security protection of property, etc.
In view of the large differences between the financial markets of the Mainland, Hong Kong and Macao, investors should also fully assess their own risk tolerance and invest rationally.
Dong Ximiao, chief researcher of China Merchants Union, believes that the high-interest deposit products currently appearing in Hong Kong are not for all customers, but only "Cross-border Wealth Management Connect" and "Southbound Connect" customers can apply, with the period generally ranging from 1 month to 3 months. moon.
This is a short-term promotional measure launched by the relevant bank and is not universal.
Mainland investors need to know more about the systems and risks of the Hong Kong and Macao financial markets. For example, there are no price limits on the Hong Kong stock market, and stocks, funds and other products tend to fluctuate greatly.
Financial management departments must adhere to the arrangements for the qualified investor mechanism and properly protect the legitimate rights and interests of investors.
Experts interviewed believe that banks and other pilot institutions should seize policy opportunities, continue to enrich the "Cross-border Wealth Management Connect" product shelves, continuously improve product operation and management capabilities, and better respond to investors' investment demands.
At the same time, we should continue to strengthen customer services, optimize customer experience through online + offline collaboration, and standardize and improve marketing services.
The relevant person in charge of the Guangdong Branch of the People's Bank of China stated that in the future, banks and other institutions that meet the conditions and have business development needs will be supported to participate in the pilot and continue to expand the coverage of the policy.
It also guides pilot institutions to simplify business processes, enrich product categories, and optimize financial services.
In addition, we will cooperate with relevant regulatory authorities and regulatory agencies in Guangdong, Hong Kong and Macao to carry out policy publicity through multiple channels, strengthen education and guidance for investors, streamline the complaint handling mechanism, and strengthen the protection of investors in Guangdong, Hong Kong and Macao.
Wang Baohui (Source: Economic Daily)