Mainland China-domiciled funds now eligible in Vestima under the Mutual Recognition of Funds (MRF) programme

05.10.2016

International investors based in Hong Kong can now use their existing setup with Clearstream’s global Vestima fund processing platform to directly invest in MRF-eligible, China-domiciled funds. The Mainland China - Hong Kong Mutual Recognition of Funds (MRF) programme allows Hong Kong and Chinese asset managers to distribute recognised funds in both jurisdictions.

By choosing Vestima as the order routing platform for China-domiciled funds, customers benefit from the same streamlined handling of all asset classes, as all securities held with Clearstream are processed on the same platform and via the same connectivity media. This in turn enables greater efficiency, improved scalability of operations and reduced manual effort thanks to automation and the use of stored reference data for order completion. Vestima acts a single point of entry for orders, streamlined cash management and consolidated position reporting in a secure environment.

The system linkage between the Hong Kong Monetary Authority’s Central Moneymarkets Unit (CMU) and Clearstream’s Vestima also supports the processing of transactions under the MRF programme for China-domiciled funds. 

Philippe Seyll, Co-CEO of Clearstream Banking, commented: “The eligibility of China-domiciled funds in Vestima is a notable step towards opening the Chinese market for investments into domestic mutual funds. This will not only encourage foreign investment in China but also supports the internationalisation of the Renminbi. As a market infrastructure provider, our key objective is to meet our customers’ increasing demands to invest in Asia and to facilitate their business in those markets.”

The Chinese asset management industry has a high growth potential: only about three per cent of China's financial assets are held in mutual funds; the remaining majority are still held in deposits. Market liberalisation, ongoing institutional demand and the shift of the retail market from saving to investing are expected to increase the percentage of assets held in mutual funds.