Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)

Securities and Futures Services

Relevant Mainland Rules and Regulations

Rules and regulations promulgated by the Mainland authorities relating to the implementation of commitments under CEPA :

Establishing Securities Companies

According to the "Administrative Measures on Foreign-invested Securities Companies" (Mar 2020) (in Chinese only), foreign shareholders of foreign-invested securities companies should:

be located in a country or region with effective securities laws and regulatory systems, and the relevant financial regulatory institutions should have signed a Memorandum of Understanding on Cooperation of Securities Supervision and maintained an effective cooperative relationship with the CSRC or institutions accredited by the CSRC;
be legally established in the country or region where it locates; its financial indicators in the recent 3 years should also be able to satisfy the legal stipulations and the requirements of the regulatory institution of the country or region where it locates;
have operated securities businesses for 5 years or more, and have not been seriously punished by the regulatory institution, or the administrative and the judicial bodies in the recent 3 years; moreover, they must not be currently under investigation by relevant authorities because of serious violation of rules and laws;
have sound and effective internal controls;
have good international reputation and business performances; its scale, income and profit in the recent 3 years should rank among the best in the world, and its long-term credit in the recent 3 years should be maintained at a high level as well;
be able to meet other prudential conditions prescribed by the CSRC.

According to the "Regulation related to the Implementation of Supplement X to CEPA to Further Expand the Scope of Liberalization of Securities Institutions" (China Securities Regulatory Commission - Aug 2015) (in Chinese only), Hong Kong-funded financial institutions shall meet the requirements on shareholders of securities companies with foreign equity participation as stipulated by the China Securities Regulatory Commission (CSRC) and the following criteria when applying for the establishment of a joint venture securities company:
1. Applicants should be a licensed financial institution or financial holding company registered in Hong Kong; their headquarters should also be located in Hong Kong;
2. If the controlling shareholder or actual controller of the applicant is a financial holding company or financial institution, it should meet one of the following three criteria as well:
  1. The controlling shareholder or actual controller of the applicant should be registered in Hong Kong; their headquarters should also be located in Hong Kong;
  2. The applicant has carried out public offerings of shares and is listed in Hong Kong; moreover, more than 50% of its earnings before taxes are coming from Hong Kong, or more than 50% of its senior management staff are permanent residents of Hong Kong;
  3. The controlling shareholder or actual controller of the applicant has carried out public offerings of shares and is listed in Hong Kong; moreover, more than 50% of the listed company's earnings before taxes or its operating revenues are contributed by the applicant.
According to the "Special Administrative Measures on the Entry of Foreign Investment (Negative List) (2019 Version)" (in Chinese only), the percentage of shareholding of foreign investment for securities companies shall not exceed 51%. The restriction is cancelled starting from 1 April 2020. For details, please refer to the announcement of China Securities Regulatory Commission (in Chinese only).
For details, please refer to:

Securities Investment Advisory Companies

According to the "Administrative Measures on Foreign-invested Securities Companies" (Mar 2020) (in Chinese only), foreign shareholders of foreign-invested securities companies should:
1. be located in a country or region with effective securities laws and regulatory systems, and the relevant financial regulatory institutions should have signed a Memorandum of Understanding on Cooperation of Securities Supervision and maintained an effective cooperative relationship with the CSRC or institutions accredited by the CSRC;
2. be legally established in the country or region where it locates; its financial indicators in the recent 3 years should also be able to satisfy the legal stipulations and the requirements of the regulatory institution of the country or region where it locates;
3. have operated securities businesses for 5 years or more, and have not been seriously punished by the regulatory institution, or the administrative and the judicial bodies in the recent 3 years; moreover, they must not be currently under investigation by relevant authorities because of serious violation of rules and laws;
4. have sound and effective internal controls;
5. have good international reputation and business performances; its scale, income and profit in the recent 3 years should rank among the best in the world, and its long-term credit in the recent 3 years should be maintained at a high level as well;
6. be able to meet other prudential conditions prescribed by the CSRC.
For Hong Kong-funded securities companies that wish to establish a joint-venture securities investment advisory company and hold 50% of shares or more in certain reform experiment zones for "piloting financial reforms", please also refer to the "Regulation related to the Implementation of Supplement X to CEPA to Further Expand the Scope of Liberalization of Securities Institutions" (China Securities Regulatory Commission - Aug 2015 ) (in Chinese only).
For other details, please refer to:

Fund Management Companies

According to "Measures for the Supervision and Administration of Publicly Offered Securities Investment Funds Administrators" (Decree of the China Securities Regulatory Commission No. 198 - May 2022) (in Chinese only), foreign shareholders of foreign-invested fund management companies should:
1. be a financial institution or an institution that administers financial institutions with financial assets management experiences that is established according to the law of the country or region where it is located. It should exist lawfully and continuously, and should have a sound and effective internal control mechanism. Its major regulatory indicators should comply with the legal provisions of the country or region where it is located and satisfy the requirements of regulatory institution in the recent 3 years;
2. be located in a country or region with effective securities laws and regulatory systems, and the relevant financial regulatory institutions should have signed a Memorandum of Understanding on Cooperation of Securities Supervision and maintained an effective cooperative relationship with the CSRC or institutions accredited by the CSRC;
3. have good international reputation and business performances; its scale in the financial assets management business, income, profit, market share and other indicators in the recent 3 years should rank among the best in the world, and its long-term credit in the recent 3 years should be maintained at a high level as well;
4. have aggregate shareholding or equity ratio (whether held directly or indirectly) in accordance with the state's arrangements for opening up its securities sector;
5. be able to comply with the law and administrative regulations and meet the other conditions as prescribed by the CSRC upon the approval of the State Council.
According to the "Special Administrative Measures on the Entry of Foreign Investment (Negative List) (2019 Version)" (in Chinese only), the percentage of shareholding of foreign investment for securities investment fund management companies shall not exceed 51%. The restriction is cancelled starting from 1 April 2020. For details, please refer to the announcement of China Securities Regulatory Commission (in Chinese only).
For details, please refer to:

Futures Companies

Foreign shareholders of a futures company with 5% of direct shares or more should meet the relevant requirements as stipulated in "Supervision and Administrative Measures on Futures Company" (in Chinese only). For example, it should be a financial institution existing lawfully and continuously. It should also be established in accordance with the laws of the country or region where it is located. Moreover, it should fulfil the relevant capital requirements (for major shareholder: paid-in capital and net assets should not be less than RMB 100 million; for controlling shareholder and the largest shareholder: net capital should not be less than RMB 500 million). Also, according to the "Administrative Measures on Foreign-invested Futures Companies" (Decree of the China Securities Regulatory Commission No. 149 - Aug 2018) (in Chinese only), it should meet the following requirements:
1. has operated businesses for 5 years or more, and has not been seriously punished by the regulatory institution, or the administrative and the judicial bodies in the recent 3 years;
2. has a management with good professional quality and management ability;
3. has a robust internal control system and risk management system;
4. has good international reputation and business performances; its scale, income and profit in the recent 3 years should rank among the best in the world, and its long-term credit in the recent 3 years should be maintained at a high level as well;
5. be able to meet other prudential conditions prescribed by the CSRC.
For details, please refer to:
According to the "Special Administrative Measures on the Entry of Foreign Investment (Negative List) (2019 Version)" (in Chinese only), the percentage of shareholding of foreign investment for futures companies shall not exceed 51%. The restriction is cancelled starting from 1 January 2020. For details, please refer to the announcement of China Securities Regulatory Commission (in Chinese only).

Securities and Futures Practitioners

CEPA has simplified the procedures for Hong Kong professionals who are applying for the qualification of securities and futures practitioners in the Mainland. Hong Kong professionals (which refer to the permanent residents of the Hong Kong Special Administrative Region holding (or having held within the past 3 years) relevant licenses issued by the Securities and Futures Commission (SFC)) only have to pass the examination on relevant Mainland laws and regulations for the qualification; it is not necessary for them to pass the examination on professional knowledge. For details, please refer to the website of the Securities Association of China and the Hong Kong Securities and Investment Institute.

Mutual Recognition of Funds

According to the "Provisional Rules for Recognised Hong Kong Funds" (Circular of the China Securities Regulatory Commission No.12 - May 2015) (in Chinese only), to be distributed publicly in the Mainland, recognized Hong Kong funds shall be registered with the CSRC and:
1. be established and operated in Hong Kong in accordance with Hong Kong laws, be publicly sold upon the approval of the SFC, and be subject to the SFC regulation;
2. have a manager registered and operating in Hong Kong who is a holder of the Hong Kong asset management licence; for the funds that have not delegated its investment management functions to institutions of other countries or regions, they should not have been subject to any major punishment imposed by the SFC within the recent 3 years or since its establishment;
3. adopt the trusteeship system, and have a trustee or custodian that meets the qualifications stipulated by the SFC;
4. have funds in the type of conventional stock, mixed type, bond type and index type (including exchange traded funds);
5. be established for at least 1 year, with not less than RMB200 million assets under management (or its equivalent in foreign currency); it should not invest primarily in the Mainland market, and its sales volume in the Mainland should not exceed 50% of its total fund assets.
For details, please refer to:

Exchange-traded Funds

Eligible exchange-traded funds (ETFs) are included in mutual stock market access between the Mainland and Hong Kong (Stock Connect) in July 2022. Mainland and Hong Kong investors may trade eligible stocks and ETFs listed on each other's exchanges through local securities firms or brokers. For details, please refer to:

For other details, please refer to:

"Circular on Deepening the Reform of 'Separating Operating Permits and Business Licenses' to Further Boost the Vitality of Market Entities for Development" (May 2021) (in Chinese only)

Enquiries concerning the application procedures and requirements for the establishment of foreign-invested securities and futures enterprises as well as the related industry qualifications can be directed to :

China Securities Regulatory Commission
( Website: http://www.csrc.gov.cn)

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