China has released a guideline on mutual recognition of funds (MRF) to help securities investment in the country’s inland areas and Hong Kong, according to the central bank.
The scheme, launched on July 1 this year, allows funds domiciled on either side to be sold in the other’s market.
According to the guideline released by the People’s Bank of China and State Administration of Foreign Exchange, only the total amount of MRF needs to be monitored, and no approval is needed for the quota of an institution or product.
The funds raised through trans-market issuance can flow between Hong Kong and the inland areas in Renminbi and foreign currencies, or can be changed by agents at banks. The settlement via Renminbi is encouraged, the guideline said.
Since July, more than 10 MRF products have submitted applications and are expected to be put on the market by year end.