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 :

Securities Companies

According to the "Administrative Measures on Foreign-invested Securities Companies" (2020 Revision - Mar 2020) (in Chinese only), a foreign shareholder of a foreign-invested securities company shall meet the following requirements:
1. It is located in a country or region with effective securities laws and regulatory systems, and the relevant financial regulatory institution should have signed a memorandum of understanding on cooperation in securities regulation and maintained an effective cooperative relationship with the China Securities Regulatory Commission (CSRC) or institutions accredited by the CSRC;
2. It is a financial institution legally established in the country or region where it is located; and its financial indicators in the recent 3 years should comply with the legal stipulations and the requirements of the regulatory institution of the country or region where it is located;
3. It has 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 country or region where it is located in the recent 3 years; and it is not under investigation by the relevant authorities on suspicion of any major violation of laws or regulations;
4. It has sound and effective internal controls;
5. It 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;
6. It is 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" (CSRC - Aug 2015) (in Chinese only), a Hong Kong-funded financial institution applying to establish joint venture securities companies shall meet the relevant requirements for foreign shareholders of foreign-invested securities companies as stipulated by the CSRC and the following criteria:
1. The applicant should be a licensed financial institution or financial holding company registered in Hong Kong; its headquarter 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; its headquarter 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 in the recent 3 years come 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 operating revenues or earnings before taxes are contributed by the applicant.
According to the announcement of CSRC (in Chinese only), the restriction on the percentage of shareholding of foreign investment for securities companies is cancelled starting from 1 April 2020.
For details, please refer to:

Securities Investment Advisory Companies

Hong Kong securities companies which satisfy the qualification requirements as foreign shareholders of foreign-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. According to the "Administrative Measures on Foreign-invested Securities Companies" (2020 Revision - Mar 2020) (in Chinese only), a foreign shareholder of a foreign-invested securities company shall meet the following requirements:
1. It is located in a country or region with effective securities laws and regulatory systems, and the relevant financial regulatory institution should have signed a memorandum of understanding on cooperation in securities regulation and maintained an effective cooperative relationship with the CSRC or institutions accredited by the CSRC;
2. It is a financial institution legally established in the country or region where it is located; and its financial indicators in the recent 3 years should comply with the legal stipulations and the requirements of the regulatory institution of the country or region where it is located;
3. It has operated securities businesses for 5 consecutive years or more, and has not been seriously punished by the regulatory institution, or the administrative and the judicial bodies in the country or region where it is located in the recent 3 years; and it is not under investigation by the relevant authorities on suspicion of any major violation of laws or regulations;
4. It has sound and effective internal controls;
5. It 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;
6. It is able to meet other prudential conditions prescribed by the CSRC.
For Hong Kong-funded securities companies that wish to establish joint-venture securities investment advisory companies and hold 50% of shares or more in certain reform experiment zones for "piloting financial reforms" as approved by the Mainland, 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" (CSRC - Aug 2015) (in Chinese only).
For 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 CSRC No. 198 - May 2022) (in Chinese only), a foreign shareholder of a foreign-invested fund management company shall meet the following requirements:
1. It is a financial institution or an institution that administers financial institutions with financial assets management experiences that is established according to the laws 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 in the recent 3 years should comply with the legal stipulations and the requirements of the regulatory institutions of the country or region where it is located;
2. It is located in a country or region with effective securities laws and regulatory systems, and the relevant financial regulatory institution should have signed a memorandum of understanding on cooperation in securities regulation and maintained an effective cooperative relationship with the CSRC or institutions accredited by the CSRC;
3. It has good international reputation and business performances; the scale, income, profit, market share and other indicators of its financial assets management business 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. It has aggregate shareholding or equity ratio (whether held directly or indirectly) in accordance with the state's arrangements for opening up its securities sector;
5. It is able to comply with the laws and administrative regulations and meet the other conditions as prescribed by the CSRC upon the approval of the State Council.
According to the announcement of CSRC (in Chinese only), the restriction on the percentage of shareholding of foreign investment for fund management companies is cancelled starting from 1 April 2020.
For details, please refer to:
- "Measures for the Supervision and Administration of Publicly Offered Securities Investment Funds Administrators" (Decree of the CSRC No. 198 - May 2022) (in Chinese only)
- "Provisions on Issues Concerning the Implementation of the Measures for the Supervision and Administration of Publicly Offered Securities Investment Funds Administrators" (Circular of the CSRC No. 33 - May 2022) (in Chinese only)

Futures Companies

A foreign shareholder 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" (2019 Revision - Jun 2019) (in Chinese only). For example, it should be a financial institution established in accordance with the laws of the country or region where it is located and have existed lawfully and continuously. 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 CSRC No. 149 - Aug 2018) (in Chinese only), it should meet the following requirements:
1. It has operated businesses for consecutive 5 years or more, and has not been seriously punished by the regulatory institution, or the administrative and the judicial bodies in the country or region where it is located in the recent 3 years;
2. It has a management with good professional quality and management ability;
3. It has a robust internal control system and risk management system;
4. It 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. It is able to meet other prudential conditions prescribed by the CSRC.
According to the announcement of CSRC (in Chinese only), the restriction on the percentage of shareholding of foreign investment for futures companies is cancelled starting from 1 January 2020.
For details, please refer to:

Securities and Futures Practitioners

CEPA has simplified the relevant procedures for Hong Kong professionals applying in the Mainland for securities and futures industry qualifications. 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 Hong Kong Securities and Futures Commission (SFC)) only have to pass the examination on Mainland laws and regulations; 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 CSRC No.12 - May 2015) (in Chinese only), to be distributed publicly in the Mainland, a recognized Hong Kong fund shall be registered with the CSRC and meet the following requirements:
1. It is established and operated in Hong Kong in accordance with Hong Kong laws, publicly sold upon the approval of the SFC, and subject to regulation by the SFC;
2. It has a manager registered and operating in Hong Kong who is a holder of the Hong Kong asset management licence, has not delegated its investment management functions to institutions of other countries or regions, and was not subject to any major punishment imposed by the SFC within the recent 3 years or since its establishment;
3. It adopts the trusteeship system, and has a trustee or custodian that meets the qualifications stipulated by the SFC;
4. It is in the type of conventional stock, mixed type, bond type and index type (including exchange-traded funds);
5. It is established for at least 1 year, with not less than RMB200 million (or its equivalent in foreign currency) assets under management; 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 provision of securities and futures services in the Mainland can be directed to :

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

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