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Trade and Industry Department The Government of the Hong Kong Special Administrative Region
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Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)

Securities and Futures Services

Liberalisation Measures under CEPA

The Agreement on Trade in Services covers and consolidates commitments relating to liberalisation of trade in services provided in CEPA and its Supplements and also the Agreement between the Mainland and Hong Kong on Achieving Basic Liberalisation of Trade in Services in Guangdong.

Agreement on Trade in Services
Liberalisation Measures under Cross-border Services (Positive List)
Sectors or
Sub-sectors
7. Financial services
  B. Banking and other financial services (excluding insurance)
  1. Acceptance of deposits and other repayable funds from the public (CPC81115-81119)
  2. Lending of all types, including, inter alia, consumer credit, mortgage credit, factoring and financing of commercial transaction (CPC8113)
  3. Financial leasing (CPC8112)
  4. All payment and money transmission services (CPC81339)
  5. Guarantees and commitments (CPC81199)
  6. Trading for own account or for account of customers, whether on an exchange, in an over-the-counter market or otherwise, the following:
f1.  money market instruments (CPC81339)
f2.  foreign exchange (CPC81333)
f3.  derivative products including, but not limited to, futures and options (CPC81339)
f4.  exchange rate and interest rate instruments, including products such as swaps, forward rate agreements, etc. (CPC81339)
f5.  transferable securities (CPC81321)
f6. other negotiable instruments and financial assets, including bullion (CPC81339)
  1. Participation in issues of all kinds of securities (CPC8132)
  2. Money broking (CPC81339)
  3. Asset management (CPC8119, 81323)
  4. Settlement and clearing services for financial assets, including securities, derivative products, and other negotiable instruments (CPC81339 or 81319)
  5. Advisory and other auxiliary financial services (CPC8131 or 8133)
  6. Provision and transfer of financial information, and financial data processing and related software by providers of other financial services (CPC8131)
Specific
commitments
  1. To allow any Mainland-incorporated banking institution established by a Hong Kong bank that meets the following criteria to locate its data centre in Hong Kong:
    (1) Incorporated in the Mainland on or before 30 June 2008;
    (2) At the time of its incorporation, its parent bank has already established a data centre in Hong Kong;
    (3) The data centre for the Mainland business (which should include core systems such as those for customer, accounting and product information) should operate independently;
    (4) Its board of directors and senior management should assume the ultimate oversight and accountability over the management of the data centre for the Mainland business; and
    (5) The data centre for the Mainland business should meet the relevant supervisory requirements and be subject to the approval of the relevant Mainland authorities.
  2. To develop a more diversified offshore RMB product market and increase channels for two-way fund flows.
  3. Relevant agencies of both sides shall affirm concluded cooperation agreements on mutual recognition of banking professional qualifications and further promote and expand the work on mutual recognition of banking professional qualifications.
  4. To simplify the relevant procedures for Hong Kong professionals1 applying in the Mainland for securities and futures industry qualifications. Hong Kong professionals applying to obtain securities and futures industry qualifications of the Mainland need only to undertake training and pass examination on Mainland laws and regulations; and examination on professional knowledge is not required.
  5. To support qualified Mainland securities companies approved by the China Securities Regulatory Commission or other financial institutions engaged in securities activities to set up subsidiaries in Hong Kong according to relevant requirements and operate businesses in accordance with the laws.  The timeframe for Mainland securities companies to complete registration for their subsidiaries is extended from six months to one year.
  6. To allow the Hong Kong Exchanges and Clearing Limited to set up a representative office in Beijing.
  7. To allow Mainland fund management companies approved by the China Securities Regulatory Commission to establish subsidiaries in Hong Kong to operate relevant businesses.
  8. To allow subsidiaries set up in Hong Kong by qualified Mainland futures companies in developing business in Hong Kong in accordance with the laws.
  9. To explore further lowering of the eligibility requirements for QDII scheme and to increase relevant investment quotas.
  10. To deepen the co-operation between the Mainland and Hong Kong in financial services and product development and launch ETF (open-ended index-tracking exchange-traded fund), of which portfolios are constituted by Hong Kong-listed stocks in the Mainland.
  11. To proactively implement, and explore ways to promote, the Mainland-Hong Kong Mutual Recognition of Funds scheme.
  12. To enhance the variety of products under the Mainland-Hong Kong Stock Connect and allow companies with weighted voting rights structure as listed in Hong Kong to be included as eligible securities under Stock Connect upon fulfilment of certain criteria.
  13. To consider extending the scope of eligible products under the mutual market access programme by including ETFs (i.e. open-ended index-tracking exchange-traded funds).
  14. To deepen the opening-up of the Mainland securities and futures market and to support Hong Kong institutions' investments in the Mainland securities and futures market by means of the RMB Qualified Foreign Institutional Investor scheme (RQFII) and QFII.
  15. To explore promoting RMB bond issuances on the Mainland exchanges by eligible Hong Kong companies.
  16. To support eligible Hong Kong financial institutions to conduct direct investment activities in the nine Pearl River Delta municipalities in the Guangdong-Hong Kong-Macao Greater Bay Area, such as establishing, injecting capital into, or becoming a shareholder of financial institutions in the nine Pearl River Delta municipalities in the Guangdong-Hong Kong-Macao Greater Bay Area.
  17. To allow financial institutions in China (Guangdong) Pilot Free Trade Zone to, in accordance with relevant regulations, provide services to individual investors in the Pilot Free Trade Zone for investing in stocks, bonds and other negotiable securities in Hong Kong's capital market.
  18. To launch cross-boundary financial management pilot programmes that support Mainland residents in the Guangdong-Hong Kong-Macao Greater Bay Area in purchasing wealth management products sold by Hong Kong banks, through Hong Kong banks, and Hong Kong residents in purchasing wealth management products sold by Mainland banks, through Mainland banks in the Guangdong-Hong Kong-Macao Greater Bay Area.
  19. To support Hong Kong-funded non-bank payment institutions to conduct electronic payment business in the Mainland.
  20. To study the launch of Southbound Trading under Bond Connect.
  21. To allow Hong Kong-funded banks to take capital guarantee deposits for Mainland insurance companies.
Reserved Restrictive Measures under Commercial Presence (Negative List)
Sector
7. Financial Services
Sub-sector   B. Banking and other financial services (excluding insurance)
  1. Acceptance of deposits and other repayable funds from the public (CPC81115-81119)
  2. Lending of all types, including, inter alia, consumer credit, mortgage credit, factoring and financing of commercial transaction (CPC8113)
  3. Financial leasing (CPC8112)
  4. All payment and money transmission services (CPC81339)
  5. Guarantees and commitments (CPC81199)
  6. Trading for own account or for account of customers, whether on an exchange, in an over-the-counter market or otherwise, the following:
f1. money market instruments (CPC81339)
f2. foreign exchange (CPC81333)
f3.derivative products including, but not limited to, futures and options (CPC81339)
f4. exchange rate and interest rate instruments, including products such as swaps, forward rate agreements, etc. (CPC81339)
f5. transferable securities (CPC81321)
f6. other negotiable instruments and financial assets, including bullion (CPC81339)
  1. Participation in issues of all kinds of securities (CPC8132)
  2. Money broking (CPC81339)
  3. Asset management (CPC8119, 81323)
  4. Settlement and clearing services for financial assets, including securities, derivative products, and other negotiable instruments (CPC81339 or 81319)
  5. Advisory and other auxiliary financial services (CPC8131 or 8133)
  6. Provision and transfer of financial information, and financial data processing and related software by providers of other financial services (CPC8131)
 
Obligations
concerned
National Treatment
Reserved
Restrictive
Measures
Commercial Presence
  1. Hong Kong service suppliers investing in financial institutions engaging in banking business shall be financial institutions or specialised financial institutions, and the relevant conditions being:
    1) For setting up a wholly foreign-funded bank, the shareholder shall be a financial institution, and the sole or majority shareholder shall be a commercial bank;  for setting up a Chinese-foreign joint venture bank, the Hong Kong shareholder shall be a financial institution, and the sole or majority foreign shareholder shall be a commercial bank;
    2) The foreign founding member or strategic investor of a large commercial bank2, joint stock commercial bank, urban commercial bank or the Postal Savings Bank of China shall be a financial institution;
    3) The foreign founding member or strategic investor of a rural commercial bank, rural cooperative bank, rural credit union or rural bank shall be a bank;
    4) The foreign equity investor of a trust company shall be a financial institution;
    5) The foreign founding member of a financial leasing company shall be a financial institution or financial leasing company;
    6) The major foreign equity investor of a consumer finance company shall be a financial institution;
    7) The foreign investor of a money brokerage company shall be a money brokerage company;
    8) The foreign strategic investor of a financial asset management company shall be a financial institution.

  2. Approval shall be required for investing in financial institutions listed below:
    1) Approval is required for Hong Kong service suppliers to invest in large commercial banks, joint stock commercial banks, the Postal Savings Bank of China or urban commercial banks in the Mainland;
    2) Approval is required for Hong Kong service suppliers to invest in rural commercial banks, rural cooperative banks, rural credit unions, rural banks or credit companies;
    3) Approval is required for Hong Kong service suppliers to invest to establish wholly foreign-funded banks, Chinese-foreign joint venture banks, or foreign bank branches;
    4) Approval is required for foreign banks to change the operating capital of foreign bank branches in the Mainland;
    5) Approval of the state council authority supervising credit information business is required for a credit information institution to provide credit information services;
    6) Approval from the State Internet Information Office, Ministry of Commerce and State Administration for Industry & Commerce shall be required, and the "Licence for foreign institution investing and establishing financial information services company in China" shall be obtained, for establishing a financial information services company;
    7) Approval is required for Hong Kong service suppliers to invest in trust companies;
    8) Approval is required for Hong Kong service suppliers to invest in financial asset management companies, corporate group finance companies, financial leasing companies, automotive finance companies, money brokerage companies and consumer finance companies.

  3. Hong Kong service suppliers investing in financial institutions engaging in banking business shall meet relevant asset size requirements, including specifically:
    1) The foreign founding member or strategic investor of a large commercial bank, joint stock commercial bank, urban commercial bank or the Postal Savings Bank of China shall in principle have total assets of no less than US$6 billion at the end of the year immediately before;
    2) The foreign founding member or strategic investor of a rural commercial bank, rural cooperative bank, rural bank or credit company shall in principle have total assets of no less than US$6 billion at the end of the year immediately before; the foreign founding member or strategic investor of a rural credit union shall in principle have total assets of no less than US$1 billion at the end of the year immediately before;
    3) The outside strategic investor (which itself is a foreign financial institution) of a financial company of an enterprise group shall in principle have total assets of no less than US$1 billion at the end of the year immediately before;
    4) The foreign founding member of a financial leasing company shall in principle have total assets of no less than US$1 billion or equivalent amount in convertible foreign currencies at the end of the year immediately before;
    5) The foreign strategic investor of a financial asset management company shall in principle have total assets of no less than US$10 billion at the end of the year immediately before.

  4. Foreign bank branches established by Hong Kong service suppliers shall not be allowed to conduct bank cards services.  Foreign bank branches established by Hong Kong service suppliers shall not be allowed to offer RMB services to Chinese citizens in the Mainland other than accepting time deposits of no less than RMB500,000; shall not be allowed to conduct businesses restricted to wholly foreign-funded banks or joint venture banks; shall not be allowed to conduct securities or insurance businesses.

  5. For a foreign bank branch established by a Hong Kong service supplier, the RMB portion of the total of operating capital and reserves shall be no less than 8% of its RMB risk-weighted assets.   The branch of a foreign bank that continues to meet capital adequacy ratio requirements set by its domestic supervisory authorities as well as the banking regulation authorities of the State Council is exempt from the above-mentioned requirement. The branch of a foreign bank shall hold a certain proportion of interest-earning assets as required by the banking regulation authorities of the State Council.

  6. Wholly foreign-funded banks, Chinese-foreign joint venture banks and foreign bank branches established by Hong Kong service suppliers shall be required to satisfy prudential requirements for conducting RMB business.

  7. Wholly foreign-funded banks, Chinese-foreign joint venture banks or foreign bank branches engaging in interbank lending and borrowing business shall be required to obtain approval of the People's Bank of China for having the qualification to conduct RMB interbank lending and borrowing business.  A wholly foreign-funded bank or Chinese-foreign joint venture bank shall borrow or lend no more than 2 times of its paid-in capital; a foreign bank branch shall borrow or lend no more than 2 times of its RMB operating capital.

  8. Foreign bank branches established by Hong Kong service suppliers shall not be allowed to engage in the business of acting as a receiving and paying agent for the government's treasury.

  9. Hong Kong service suppliers investing in a money brokerage company shall have engaged in money brokerage business for over 20 years, have recorded profit for 2 consecutive years preceding its application, and have global institutional and communication networks necessary for conducting money brokerage business.

  10. Foreign institutions shall not be allowed to participate in the establishment of financial asset investment companies as majority shareholders.

  11. Investment in securities companies can be made in the following two forms only:
    1) Where investment in securities companies is made in the form of joint venture, which includes: the establishment of joint venture securities companies through joint capital contribution with domestic shareholders in accordance with law; and the conversion of Mainland-funded securities companies into joint venture securities companies according to law by legal transfer and acquisition of shareholding in the Mainland-funded securities companies. (In line with the national treatment, the "participation in one and holding of one principle" is applicable to the number of Mainland-Hong Kong joint venture securities companies that are allowed to be invested in through shareholding acquisition by the same Hong Kong-funded financial institution or by various Hong Kong-funded financial institutions which are effectively controlled by the same entity.)
    2) Investment by overseas investors in listed Mainland-funded securities companies may be done by way of holding shares in a listed Mainland-funded securities company through securities transactions on a stock exchange, or by establishing a strategic partnership with a listed Mainland-funded securities company and obtaining approval of the China Securities Regulatory Commission for holding shares in a listed Mainland-funded securities company with its approved scope of business remaining unchanged (on the premise that the controlling shareholder is a Mainland shareholder, the listed Mainland-funded securities company can be exempted from the requirement that the shareholding percentage of at least one Mainland shareholder being not less than 49%).
Overseas investors hold through securities transactions on a stock exchange in accordance with law, or hold jointly with others under an agreement or other arrangements, more than 5% of the shares of a listed Mainland-funded securities company, shall comply with the qualification requirements for overseas shareholders of joint venture securities companies and abide by the Securities Law and regulations of the Mainland on mergers and acquisitions of listed companies as well as change in particulars of securities companies. The percentage of aggregate shareholding held (including those directly held and indirectly controlled) by all overseas investors in a listed Mainland-funded securities company shall not exceed 51%3.
  1. Where investment in securities companies is made in the form of a joint venture, the percentage of shareholding held by overseas shareholders or the percentage of their interests in an overseas-invested securities company shall not exceed 51% in aggregation (including those directly held and indirectly controlled)4.  The overseas shareholders of a joint venture securities company shall comply with the Mainland's qualification requirements for overseas shareholders of foreign-invested securities companies.

  2. Investment in fund management companies by Hong Kong-funded financial institutions can be made only in the form of joint venture5 (in line with the national treatment, the "participation in one and holding of one principle" is applicable to the number of Mainland-Hong Kong joint venture fund companies that are allowed to be invested in through shareholding acquisition).

  3. Investment in futures companies can be made only in the form of joint venture.  The percentage of shareholding owned by qualified Hong Kong service suppliers in a joint venture futures company shall not exceed 51% (including shareholding of related parties)6. (In line with the national treatment, the "participation in one and holding of one principle" is applicable to the number of Mainland-Hong Kong joint venture futures companies that are allowed to be invested in through shareholding acquisition by the same Hong Kong-funded financial institution or by various Hong Kong-funded financial institutions which are effectively controlled by the same entity.)
An overseas shareholder holding more than 5% of shareholding in a futures company shall meet the following criteria: being a financial institution established and legally existed under the laws of Hong Kong; all of its financial indicators and regulatory indicators in the preceding three years having met the relevant provisions of the laws of Hong Kong and the requirements of regulatory bodies.
  1. Investment in securities investment advisory companies by Hong Kong-funded financial institutions can be made only in the form of joint venture. (In line with the national treatment, the "participation in one and holding of one principle" is applicable to the number of Mainland-Hong Kong joint venture securities investment advisory companies that are allowed to be invested in through shareholding acquisition by the same Hong Kong-funded financial institution or by various Hong Kong-funded financial institutions which are effectively controlled by the same entity.)
Hong Kong securities companies which satisfy the qualification requirements as overseas shareholders of overseas-invested securities companies, and Mainland securities companies which satisfy the requirements for establishing subsidiaries, are allowed to set up joint venture securities investment advisory companies in the Mainland. The joint venture securities investment advisory company shall be a subsidiary of the Mainland securities company, the scope of business of which shall focus specifically on carrying on securities investment advisory businesses. The percentage of shareholding of the Hong Kong securities company may, at a maximum, reach 49% of the total shareholding of such joint venture securities investment advisory company.
 
In certain reform experiment zones for "piloting financial reforms" as approved by the Mainland, the percentage of shareholding of a Hong Kong-funded securities company which satisfies the relevant requirements for setting up a Mainland-Hong Kong joint venture securities investment advisory company in such company may reach more than 50%.
  1. Where Hong Kong shareholders acquire shareholding in Mainland-Hong Kong joint venture securities companies, fund management companies, futures companies or securities investment advisory institutions, capital contribution shall be made in a currency that is freely convertible.
For clarity and avoidance of doubt, any foreign bank branch established in the Guangdong province by a Hong Kong bank can apply to establish "cross-location" sub-branches (i.e. different from the municipality where the relevant branch is located) within the Guangdong province with reference to the relevant rules in the Mainland for establishing sub-branches.  If a wholly foreign-funded bank established in the Mainland by a Hong Kong bank has already established branches in the Guangdong province, such branches can apply to establish "cross-location" sub-branches (i.e. different from the municipality where the relevant branch is located) within the Guangdong province with reference to the relevant rules in the Mainland for establishing sub-branches.
   
Sector
7. Financial Services
Sub-sector   C. Other
Obligations
concerned
National Treatment
Reserved
Restrictive
Measures
Commercial Presence

Apply national treatment.
1 In this sector, professionals refer to Hong Kong permanent residents who have been licensed by the Securities and Futures Commission of Hong Kong.
2 For the purpose of this clause, large commercial banks refer to Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, and Bank of Communications.
3 The actual time in 2020 to remove the restriction on foreign shareholding percentage is subject to the Securities Regulatory Commission's announcement.
4 The actual time in 2020 to remove the restriction on foreign shareholding percentage is subject to the Securities Regulatory Commission's announcement.
5 The actual time in 2020 to remove the restriction on foreign shareholding percentage is subject to the Securities Regulatory Commission's announcement.
6 The actual time in 2020 to remove the restriction on foreign shareholding percentage is subject to the Securities Regulatory Commission's announcement.

For details about financial cooperation under the Agreement on Economic and Technical Cooperation (Ecotech Agreement), please refer to the Ecotech Agreement.