Launched in September 2021, the Cross-boundary Wealth Management Connect Scheme in the Greater Bay Area (Cross-boundary WMC) is one of the key initiatives under the mutual market access schemes between the capital markets of Hong Kong, Macao and the Mainland and allows eligible Mainland, Hong Kong and Macao residents in the Greater Bay Area to invest in wealth management products distributed by financial institutions in each other’s market through a closed-loop funds flow channel established between their respective systems. In January 2024, enhancement measures for the Cross-boundary WMC were announced to refine the eligibility criteria of Mainland investors, expand the scope of participating institutions to include eligible securities firms, expand the scope of eligible products, increase the individual investor quota and further enhance the promotion and sales arrangements, after which the Cross-boundary WMC now officially enters the 2.0 era (Cross-boundary WMC 2.0). On 1 November 2024, a qualified participant list was released (2024 List), setting out the first batch new market entrant, since then substantial securities firms in Hong Kong are rushing to launch the 1st market product under the Cross-boundary WMC 2.0. According to the 2024 List, SDICS International Asset Management (Hong Kong) Limited in Hong Kong (SDICS International) and SDIC Securities Co., Ltd. in mainland China (SDIC Securities) are among the first batch obtaining approval for Cross-boundary WMC 2.0, respectively from the Securities and Futures Commission in Hong Kong (SFC) and the authorities in mainland China.
We have advised SDICS International as the fund manager on its public fund product under this Cross-boundary WMC 2.0, particularly the formation of SDICSI (Hong Kong) Open-ended Fund Company, a Hong Kong public open-ended fund company, along with its initial sub-fund, SDICSI USD Money Market Fund (Fund). We have led the deal and assisted our clients in answering multiple rounds of enquires with SFC regarding this new product, after which the Fund was conditionally registered and authorized by the SFC on 17 October 2024 and is launched on 2 December 2024 and will be recognized under the Cross-boundary WMC 2.0.
SDICS International is a group affiliate of SDIC Securities and is licensed under the SFC to provide various financial services, including asset management services. Established in August 2006, SDIC Securities is a fully licensed comprehensive securities firm, ranking among the best in China. Headquartered in Shenzhen, it has 50 branches in Beijing, Shanghai, Guangzhou, Shantou, Foshan and others, along with 310 securities sales offices in 29 provincial-level administrative regions. As of 31 December 2023, SDIC Securities had total assets of RMB254.844 billion and net assets of RMB49.484 billion. The dual qualification of SDICS International and SDIC Securities according to the 2024 List will support operation of Southbound Cross-boundary WMC of the Fund within the client’s own group.
The Dentons Hong Kong team, which advised on Hong Kong law in such Fund formation, was led by investment funds partner Charles Yim, along with managing associate Ivan Tsang, associates Kelvin Wong, Tracy Lei, trainee solicitor Sunny Liu, and legal assistants Yeung Man Fung, Alison Chan and Helen Hu.
