Year-end hope for ETF Connect but issues remain

Business | Tereza Cai 14 Jan 2020

Secretary for Financial Services and the Treasury Henry Lau Jr hopes the ETF Connect between Hong Kong and mainland could be completed this year, but technical issues remain unsolved.

Lau said one of the approaches in the discussion is in the form of the stock connect. In the form of mutual recognition of funds, where the ETFs were to list on exchanges of both Hong Kong and the mainland, there will be a price difference, said the Securities Futures and Commission's deputy chief executive Julia Leung Fung-yee.

Leung said the SFC and mainland counterparts are in talks to solve technical issues in ETF Connect, and both sides have not reached any agreement on ETF Connect's underlying assets.

Recent social unrest did not negatively affect the body's cooperation with the mainland government, she continued, adding that the Greater Bay Area two-way wealth management connect scheme was launched during the period.

However, Leung declined to comment on instances of mainlanders working with local brokers to open new securities accounts with different phone numbers to repeatedly subscribing IPOs as a way to gain advantages.

Leung said if there is a non-compliance, the SFC would take action.

On the other hand, she revealed that lots of capitals flowed out of the local equity market from May to August last year, affected by the trade frictions between China and the US.

Meanwhile, the Hong Kong government is looking for a path to peace, harmony, and prosperity, and is preparing to offer more relief measures when needed, Financial Secretary Paul Chan Mo-po said.

Almost one out of two locals have registered in the Faster Payment System as of the end of last year, with a daily trading volume of HK$2.4 billion and 3.8 billion yuan (HK$4.2 billion), said Lau, arguing that the city has been committed to developing fintech in recent years.

The Asia-Pacific Structured Finance Association, The Hong Kong Institute of Bankers and the Asian Academy of International Law called for a focus on tackling legal, regulatory and technical complexities, in order to establish itself as an international securitization hub.

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