Cross-boundary WMC – operational arrangements for the Northbound Scheme
Under the Cross-boundary WMC, Hong Kong eligible investors may invest in eligible investment products distributed by Mainland banks via the designated channel under the Northbound Scheme. In which, cross-boundary fund remittances are undertaken by banks in Hong Kong and distribution of investment products on the Mainland is undertaken by banks in the Mainland.
Eligible investors:
- Hold a Hong Kong Identity Card (including both permanent and non-permanent residents);
- Invest in their personal capacity (but not as joint-name or corporate customers); and
- Be assessed by Hong Kong banks as not being a vulnerable customer (Vulnerable customer refers to a customer whose ability to understand the associated risks of his/her investment and withstand the potential losses of the investment is limited.).
Closed-loop funds flow management:
For eligible banks in Hong Kong, they may partner with one or more Mainland banks to embark on Northbound Scheme activities. However, Hong Kong investors should choose only one Mainland partner bank to open a dedicated investment account (If investors already maintain an account with investment function with the Mainland partner bank, they may designate the account as the dedicated investment account). Each investor should open only one Hong Kong bank account as dedicated remittance account and pair with the Mainland dedicated investment account. The flow of funds between the accounts will be subject to closed-loop management.
All cross-boundary remittances between the dedicated remittance account and the dedicated investment account should be conducted in renminbi and subject to quota management. The funds will also be subject to closed-loop funds flow management, that is, to ensure that the dedicated remittance account is the only source of investment principal and the only account to which funds are remitted back via the same route under the Northbound Scheme. If investors would like to withdraw their principal and investment proceeds, they can remit such funds from the dedicated investment account to the dedicated remittance account according to the arrangements above.
Quota management:
The aggregate quota under the Northbound Scheme is RMB 150 billion. The individual investor quota is RMB 1 million.
The usage of both the aggregate quota and the individual investor quota is calculated on a net cross-boundary remittance basis:
Usage of the aggregate quota under the Northbound Scheme = Cumulative remittances to the Mainland under the Northbound Scheme – Cumulative remittances from the Mainland under the Northbound Scheme
For example, a “Northbound Scheme” investor remits RMB 0.8 million to the Mainland to purchase investment products. Then the usage of his/her individual investor quota will be RMB 0.8 million. If the investor subsequently sells part of the investment and remits some of the gains and principal, say RMB 0.2 million, back to Hong Kong, his or her individual investor quota usage will be RMB 0.6 million (i.e. RMB 0.8 million - RMB 0.2 million = RMB 0.6 million).
When the usage of the aggregate quota or the individual investor quota under the Northbound Scheme reaches its upper limit, the investor will no longer be able to remit funds to the Mainland from Hong Kong under the Northbound Scheme. However, remittances from the Mainland back to Hong Kong will not be affected, and investors can continue to invest with funds already remitted to the dedicated investment account.
Cross-boundary renminbi remittance to the Mainland under the Northbound Scheme is not subject to the daily maximum quota per person for individual Hong Kong residents’ inward remittance to bank accounts under the same name on the Mainland. For details, please refer to the Implementation Arrangements for the Cross-boundary Wealth Management Connect Pilot Scheme in the Guangdong-Hong Kong-Macao Greater Bay Area announced by the HKMA.
