ENG-2015 — Page 102

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Financial and Monetary Affairs

billion, and 24 SFC-authorised RQFII/Stock Connect ETFs adopting dual trading counters trading for the RMB and HKD with an aggregate NAV of RMB32.7 billion. The RQFIl scheme continues to promote the development of a broader range of RMB investment offerings in Hong Kong and to strengthen the city's position as the leading offshore RMB centre.

Thirteen Hong Kong insurance companies have received approval to invest in the Mainland's interbank bond market since a pilot scheme for eligible institutions was extended to the city's insurance companies in 2012.

In November 2015, the IMF decided to include the RMB in its Special Drawing Right basket of currencies with effective from 1 October 2016. The decision reaffirmed the status of the RMB as a freely usable currency, and would add impetus to the internationalisation of the RMB and the development of Hong Kong's offshore market.

Shanghai-Hong Kong Stock Connect

The Shanghai-Hong Kong Stock Connect has been operating smoothly since its launch in November 2014. The programme marks an important step in the opening up of the Mainland's capital markets and the internationalisation of the RMB. It also reinforces Hong Kong's position as a premier international financial centre and the city's role as an offshore RMB business centre.

Mutual Recognition of Funds

The Mainland-Hong Kong Mutual Recognition of Funds (MRF) arrangement, launched in July, allows qualified Mainland and Hong Kong funds to be offered directly to the public in each other's market after obtaining authorisation or approval under streamlined procedures. The arrangement is a milestone in the opening up of the Mainland's funds market to offshore funds and makes available a wider selection of fund products to investors in both markets. On 18 December, the SFC authorised the first batch of four Mainland funds and the China Securities Regulatory Commission approved the first batch of three Hong Kong funds under the arrangement. As of the end of 2015, the SFC had authorised a total of 13 Mainland funds.

Mainland and Hong Kong Closer Economic Partnership Arrangement

The Closer Economic Partnership Arrangement (CEPA), which came into force in 2004, gives Hong Kong's financial service providers and professionals greater market access and flexibility in their Mainland operations. It has also enhanced Hong Kong's attractiveness to market users and strengthened the city's competitiveness as an international financial centre and the premier capital formation centre for Mainland enterprises.

On 27 November 2015, the Central People's Government and the Hong Kong Special Administrative Region Government signed an Agreement on Trade in Services under the CEPA framework, to be implemented on 1 June 2016. The agreement basically achieves liberalisation of trade in services between the Mainland and Hong Kong. The key liberalisation measures cover the areas of accounting, insurance, securities and banking.

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