On December 20, the China Securities Regulatory Commission (CSRC) said that in order to deepen the pragmatic cooperation between the capital markets of the mainland and Hong Kong, better meet the cross-border wealth management needs of investors in the two places, promote the high-level institutional opening of the capital market, and consolidate and enhance Hong Kong's status as an international financial center, the China Securities Regulatory Commission further optimized the mutual recognition of funds arrangement between the mainland and Hong Kong, and issued the "Administrative Regulations on Hong Kong Mutual Recognition of Funds" (hereinafter referred to as the "Administrative Regulations"), which will come into force on January 1, 2025.

The China Securities Regulatory Commission said that in the next step, it will continue to coordinate opening up and security, adhere to the equal emphasis on "bringing in" and "going out", steadily expand the institutional opening of the capital market, continue to do a good job in the implementation of the "Management Regulations", and truly implement the measures to benefit Hong Kong.

The "Management Provisions" mainly revise 4 contents

In order to further enhance the Mutual Recognition of Funds (MRF) mechanism between the Mainland and Hong Kong, the SFC has made a number of amendments to the Administrative Provisions, with a view to steadily expanding the opening up of the capital market and better meeting the cross-border wealth management needs of investors in both places. The following are the main revisions:

Relaxation of sales ratio restrictions: Appropriately relax the sales ratio restrictions of MRF in each other's markets (guest locations) from the original 50% to 80%, following the principle of steady and orderly liberalization, so as to provide more room for further integration of the fund markets of the two places.

Relaxation of restrictions on delegation of investment management functions: Recognised funds are allowed to delegate their investment management functions to overseas affiliates within the group, but require that the authorized institutions be located in countries or regions that have signed a memorandum of understanding on regulatory cooperation with the China Securities Regulatory Commission (CSRC) and maintain effective regulatory cooperation to ensure that the interests of investors are adequately protected.

Expanding the scope of MRF: The addition of "other fund types authorized by the CSRC" to the MRF category has reserved room for more conventional products to be included in the scope of MRF in the future, which will help enrich the supply of fund products in the two markets and better meet the diversified needs of investors.

Adaptive revision of relevant provisions: In light of the updates to the information disclosure and sales rules of public funds in recent years, individual provisions in the Administrative Provisions have also been adaptively revised to ensure that they comply with the latest regulatory requirements.

According to market analysts, the revision of the MRF rules will not only further enrich the product supply of MRF, but also actively promote the institutional opening up of the fund markets of the two places, which is of great positive significance.

Supporting investors to protect their rights in accordance with the law: Special representative litigation helps to legalize the securities market

Recently, the Nanjing Intermediate People's Court and the Shenzhen Intermediate People's Court respectively applied the ordinary representative litigation procedures to the cases of disputes over the liability for misrepresentation of Jin Tongling and Meishang Ecological Securities. In this regard, on the evening of December 20, the person in charge of the relevant department of the China Securities Regulatory Commission said in response to reporters' questions that the China Securities Regulatory Commission supports the Investor Service Center to accept the special authorization of more than 50 investors in accordance with the law, apply to participate in the litigation and convert it into a special representative litigation procedure.

Protect the rights and interests of investors and severely punish illegal acts

The misrepresentations of Jin Tongling and Meishang Ecology and other securities violations have seriously disrupted the order of the securities market and damaged the legitimate rights and interests of the majority of investors. The China Securities Regulatory Commission (CSRC) has imposed administrative penalties on the relevant acts in accordance with the law, and stressed that in accordance with the Securities Law and other relevant provisions, the injured investors have the right to file civil lawsuits against the two companies and the relevant responsible persons in accordance with the law to recover losses. The court's acceptance of these cases in accordance with the law and the application of ordinary representative litigation procedures is a strong protection of the rights and interests of investors, and the CSRC supports this.

Promote special representative litigation to protect the interests of small and medium-sized investors

"The special representative litigation for securities disputes is an important legal means conferred on investor protection agencies by the Securities Law." The person in charge of the relevant department of the China Securities Regulatory Commission pointed out that the Investor Service Center, as a statutory investor protection agency, promptly followed up the trial of the dispute over the liability for false statements of Jin Tongling and Meishang Ecological Securities, and accepted the special authorization of investors in accordance with the law, and applied to participate in the litigation as a representative and converted to a special representative litigation, which is an important measure to actively perform its statutory functions and help effectively safeguard the legitimate rights and interests of the majority of investors. The China Securities Regulatory Commission (CSRC) has made it clear that it supports the advancement of the litigation of the special representatives in these two cases in accordance with the law.

Build an all-round three-dimensional accountability system to promote a healthy market ecology

The China Securities Regulatory Commission (CSRC) has thoroughly implemented the decisions and arrangements of the CPC Central Committee and the State Council, adhered to the supervision of "long teeth and thorns", highlighted the simultaneous punishment, prevention and treatment, and continued to work with relevant parties to increase all-round and three-dimensional accountability for securities violations and crimes.

The China Securities Regulatory Commission (CSRC) supports more investors to take up legal weapons, including civil lawsuits, to pursue civil liability for damages for violations of laws and regulations; At the same time, the Investor Service Center will be supported in exercising the legal function of carrying out special representative litigation on behalf of investors in accordance with the law, so as to better serve investors. In addition, the China Securities Regulatory Commission will actively cooperate with the people's courts to accept and hear more special representative lawsuits for securities disputes in accordance with the law, safeguard the legitimate rights and interests of investors, especially small and medium-sized investors, and promote the formation and development of a good market ecology.

Clarify the qualifications of the chairman and senior management of securities and fund companies

The website of the China Securities Regulatory Commission (CSRC) recently published the Guidelines for the Application of Regulatory Rules - Institutional No. 4 (hereinafter referred to as the "Guidelines") and related explanations, which further clarified the qualifications and filing of directors, supervisors and senior managers of securities and fund operating institutions. Here are the main ones:

Strengthen professional competency requirements

In order to further strengthen the professional competence of the chairman and general manager of a securities fund operating institution, the Guidelines stipulate that the proposed chairman and general manager shall meet the following conditions:

More than 3 years of experience in securities, funds or finance;

At least one person must have at least 3 years of experience in securities and funds related to the proposed position.

This requirement applies to those who intend to serve as chairman and general manager after the issuance of the Guidelines, and aims to ensure that the management has sufficient industry experience and professional background to better lead the company's development.

Standardize the filing process

In order to prevent the appointment of unqualified personnel from having a negative impact on the normal operation of securities and fund operating institutions, the Guidelines emphasize the importance of job filing. Specifically:

Prior inquiry: Before appointing directors, supervisors and senior managers, securities and fund operating institutions shall, in accordance with Article 36 of the Measures for Senior Executives, inquire about the employment and practice information of relevant personnel through systems such as the capital market integrity file database and the registration/registration platform of industry association practitioners, and prudently examine whether they meet the relevant qualifications.

Communicate in advance: If it is difficult for a securities fund operating institution to determine whether the chairman and senior management personnel to be hired meet the qualifications, it should communicate with the relevant dispatched agency of the China Securities Regulatory Commission before making an appointment decision. If it is found that the proposed person does not meet the requirements of the post after communication, the institution shall promptly correct it and avoid improper appointment.

Penalties for violations: In the event that the appointed chairman of the board of directors and senior management personnel do not meet the requirements of the post due to the failure to conduct prudent inspections or communicate with the dispatched agencies in accordance with the regulations, the China Securities Regulatory Commission and the relevant dispatched agencies will take heavy administrative supervision measures against the securities and fund operating institutions and relevant responsible personnel in accordance with Article 51 of the Senior Management Measures.

Through the above-mentioned measures, the Guidelines not only clarify the qualifications of key personnel of securities and fund operating institutions, but also standardize the filing process to ensure the professionalism and compliance of management candidates, so as to protect the stable operation of securities and fund operating institutions and the interests of investors.