On April 19, 2024, the China Securities Regulatory Commission (CSRC) introduced five measures to fortify capital market cooperation with Hong Kong, solidifying Hong Kong's position as a global financial hub. The CSRC revised the 'Interim Provisions on Hong Kong Mutual Recognition Fund Management' to optimize the mutual recognition arrangement of funds between mainland China and Hong Kong.

The revised regulations aim to enhance the mutual recognition mechanism, which has been operating smoothly since its implementation in July 2015. The mechanism has effectively met the cross-border financial management needs of investors in both regions, supporting Hong Kong's development as an international financial center. To further leverage the mechanism's benefits, the revisions will relax the sales ratio limit of mutual recognition funds in the host region from 50% to 80% and allow the transfer of investment management functions of Hong Kong mutual recognition funds to overseas asset management institutions within the same group as the manager.

The CSRC is seeking public opinions on the 'Regulations on Hong Kong Mutual Recognition Fund Management (Draft for Soliciting Opinions)' to further refine the revisions. By soliciting valuable feedback from all stakeholders, the CSRC aims to refine the regulations and implement them effectively. This move demonstrates the commitment of both regions to strengthening their financial cooperation and solidifying Hong Kong's position as a global financial hub.

The enhanced mutual recognition mechanism will facilitate greater collaboration and investment flow between mainland China and Hong Kong, fostering a more interconnected financial ecosystem. By optimizing the fund management framework, both regions can better serve investors and support the growth of the financial sector.

The CSRC's initiative reflects the ongoing efforts to deepen financial cooperation between mainland China and Hong Kong, ultimately promoting the development of a more robust and interconnected financial market in the region.