Frequently Asked Questions about GBA Wealth Management Connect
1. What is a GBA Wealth Management Connect Southbound Account?
- Southbound Wealth Management Connect allows qualified GBA mainland investors to invest in selected eligible wealth management products sold by banks in Hong Kong through designated channels.
- Customers first need to set up a bank account with cross-border remittance function with the partner bank in the Mainland designated by the Bank in Hong Kong ("Mainland Remittance Account"), and the Customers also need to open a GBA Wealth Management Connect Southbound Account (“Southbound Account”) with investment function in the Bank in Hong Kong and bind it to the corresponding Mainland Remittance Account to form a "one-to-one" pairing.
- Customers can remit to the Southbound Account in Hong Kong through the Mainland Remittance Account and purchase qualified wealth management products sold by the Bank in Hong Kong through the Southbound Account.
2. What is a "qualified investor"? What are the requirements?
Mainland investors should meet all the requirements set by both the Mainland and Hong Kong regulatory authorities, including
- Investment in single name account;
- Have full capacity for civil conduct;
- Being residents registered in the 9 GBA cities, or with record of social security contribution or individual income tax payment in the 9 GBA cities for 5 consecutive years;
- With 2 or more years of investment experience and net month-end household financial assets of RMB 1 million or more over the past 3 months, or month-end household financial assets of RMB 2 million or more over the past 3 months.
- As assessed by the Bank of Hong Kong as not belonging to a vulnerable customer
3. Account Opening Arrangements
Mainland investors should complete the account opening procedure by attestation through a partner bank in Mainland, or open the account through a bank in Hong Kong in person.
4. Can investors in the Mainland open a dedicated investment account with Hong Kong banks before opening a dedicated remittance account with Mainland banks?
Yes, they can. But mainland investors must provide the Mainland Remittance Account number for the Bank in Hong Kong to complete the pairing before activating the Southbound Account.
5. How can I remit and are there any restrictions?
- The cross-boundary capital flows in Wealth Management Connect will be subject to the total and individual investor quota management, and will be conducted and managed in a closed-loop system by bundling the Mainland Remittance Account and Southbound Account to ensure that the relevant funds will only be used to invest in eligible investment products. Thus, customers can only use the Mainland Remittance Account bound in the Mainland to make cross-border remittances, collection and receive investment returns under Southbound Connect.
- The funds in the Southbound Account can only be used to purchase eligible wealth management products and for outward remittance to the Mainland Remittance Account.
- Customers are not allowed to transfer funds from the Southbound Account to any accounts (including non-Hong Kong accounts) other than the Mainland Remittance Account.
- Customers are not allowed to withdraw cash from the Southbound Account or use the asset(s) in the Southbound Account for pledge, leverage, guarantee and other purposes.
- Southbound Account can only receive funds from the Mainland Remittance Account in RMB, and remit funds back to the Mainland Remittance Account in RMB. Regardless of the settlement currency of the eligible wealth management products invested by the customer, when the investment is withdrawn and the funds are remitted back to the Mainland Remittance Account, the funds must be converted back to RMB.
- All cross-border remittances between the Mainland Remittance Account and the Southbound Account must be in RMB, which means the Mainland Remittance Account of our Mainland partner bank can only send or accept RMB funds.
- The Bank in Hong Kong will provide customers with foreign exchange services to purchase eligible wealth management products denominated in Hong Kong dollars and foreign currencies. Customer can also directly invest in eligible wealth management products denominated in RMB in the Southbound Account.
6. How many Southbound Accounts can be opened by each investor?
Each eligible Southbound investor can only open one Mainland Remittance Account and one Southbound Account at any time.
7. Is there an individual investor quota?
- The individual investor quota is calculated on a net basis. The accumulated net remittance amount of the customer to the Southbound Account through the Mainland Remittance Account shall not exceed the individual investor quota at any time.
- The Individual investor quota for each eligible investor is RMB 1 million.
- The usage of the individual investor quota under Southbound Connect is calculated as follows:
Usage of individual investor quota under Southbound Connect =
cumulative remittances from the Mainland to Hong Kong and Macao under Southbound Connect – cumulative remittances from Hong Kong and Macao back to the Mainland under Southbound Connect
- Example 1:
If a customer first remits RMB 500,000 from the Mainland to Hong Kong, then remits RMB 100,000 from Hong Kong to the Mainland, Individual investor quota usage is RMB 400,000 and the Available Quota is RMB 600,000.
- Example 2:
If a customer first remits RMB 500,000 from the Mainland to Hong Kong, then remits RMB 600,000 investment return from Hong Kong to the Mainland, the individual investor quota usage is RMB -100,000 and the available quota is RMB 1,100,000.
- Example 1:
- Subject to the aggregate quota in Q8, if the net transfer of funds into the Southbound Account exceeds the individual investor quota limit, the Bank in Hong Kong will refuse to receive the funds and notify the mainland partner bank to return the bulk remittance to the Mainland Remittance Account.
- In addition, the use of individual investor quota is also affected by the aggregate quota, see Q8.
8. Aggregate quota
Aggregate quota is the total amount of funds that is allowed to be remitted from the Mainland to Hong Kong and Macao under Southbound Connect. The aggregate quota is calculated on a net basis. The cumulative net remittance from the Mainland under Southbound Connect should not, at any time, exceed the aggregate quota.
- The aggregate quota for the Southbound Scheme is initially set at RMB 150 billion.
- Customers should pay attention to the possible impact of the limit on the total amount and related risks. For example, the Bank in Hong Kong may suspend processing of a customer's Southbound - related remittance instructions from the Mainland to Hong Kong due to the total amount being used up. Remittances returned to the Mainland and investment instructions that have been submitted to the Southbound Account will not be affected.
- The aggregate quota is subject to changes by the regulatory authorities from time to time.
9. Eligible Wealth Management Products
Wealth management products under Southbound Connect include
- Investment products (excluding products listed and traded on the Hong Kong Exchanges and Clearing Limited)
The following products, which are assessed as “non-complex” and “low” risk to “medium” risk by Hong Kong banks distributing such products:
(1) funds domiciled in Hong Kong and authorised by the Securities and Futures Commission; and
RMB, HKD and foreign currency deposits namely US dollar, Euro, UK Pound Sterling, Australian dollar, New Zealand dollar, Canadian dollar, Swiss Franc, Japanese Yen and Singapore dollar.