Hong Kong No. 9 License Practice：Application requirements、Overseas channels and cost considerations

Hong Kong license number 9，Right nowHong Kong Securities and Futures CommissionType 9 regulated activity license，The core business scope is to provideasset Management。As mainland private equity institutions accelerate their expansion into overseas markets,，Hongkong9license plateand Hong Kong No. 9 license plate resources with RO have received great attention。For those wishing to issue offshore funds、Expand overseas asset allocation、For private equity managers who accept funds from international investors，9The license has become an important compliance channel for entering the international capital market.。

in recent years，Chongyang Investment、Fushan Investment、China Shepherd Fund、Wangzheng Capital and other private equity institutions have successively established subsidiaries in Hong Kong、Issuance of fund products，Driven by the continued increase in demand for Hong Kong No. 9 license applications。Due to the increase in applicants，Approval resources are tight，The market generally feels that the difficulty of applying is increasing，Regulatory scrutiny is also becoming more stringent。

Positioning and core value of Hong Kong License No. 9

Hong Kong implements financial license management system。If financial institutions plan to develop securities、futures、Leveraged Forex、asset Management、Regulated business such as credit rating，Must apply for the corresponding license from the Securities and Futures Commission of Hong Kong in accordance with the Securities and Futures Ordinance。

In the Hong Kong Securities and Futures Commission licensing system，Common categories include：

1. Category 1：Securities trading。
2. Category 2：Futures contract trading。
3. Category 3：Leveraged Forex Trading。
4. Category 4：Advise on securities。
5. Category 9：Provide asset management。
6. Category 10：Providing credit rating services。

9The license is a type 9 regulated business license regulated by the Securities and Futures Commission of Hong Kong in accordance with the Securities and Futures Ordinance.，Licensed institutions can carry out asset management business within a compliance framework。For mainland private equity institutions，Holding a Type 9 license usually means obtaining a compliance "pass" to participate in international capital markets：Can directly participate in overseas investment，There are also opportunities to attract funds from overseas investors。

For private equity managers，9The commercial value of license plates is mainly reflected in three aspects:：First, support customers in overseas asset allocation；Second, it can develop more investment and asset management businesses；Third, the scope of investment tools and markets is wider，Helps to undertake overseas funds and connect domestic and foreign investment opportunities。therefore，9The Hong Kong financial license has become one of the most demanded Hong Kong financial licenses by mainland institutions.。

Hong Kong No. 9 License Application Popularity and Approval Difficulties

Market data has shown，Year 6、7The peak period for license application is the 9th of the month.，The application growth rate increased significantly。After the applicant organization is added，Hong Kong’s Securities and Futures Commission’s review pressure rises simultaneously，Market feedback believes that the approval of license No. 9 is more difficult，and may be further tightened。

9The license itself is not a low-threshold license。For the applicant organization，Supervision pays more attention to shareholder background、business model、Compliance structure、Personnel qualifications、internal control、risk management、Customer asset protection and real operating capabilities。Only capital strength、Management experience、Institutions with mature compliance awareness and team configuration，It is more suitable to advance the application。

Main requirements for Hong Kong Type 9 license application

Applying for Hong Kong No. 9 license usually requires meeting stricter requirements、office、Governance and operational requirements。in，Responsible staffing is one of the core review focuses。

1. The applicant organization generally needs to configure 2 Hong Kong digitsLicensed Responsible Person，Immediate RO。
2. Responsible officers usually need to have 3 to 5 consecutive years、Public and verifiable capital markets performance record。
3. Responsible personnel need to pass a series of qualification checks、Competency assessment and related examination requirements。
4. The applicant company needs to have an actual office address in Hong Kong，rather than just formal registration。
5. The organization should have an experienced management team，Able to support the company's continued、reality、Compliance operations。

From a practical perspective，The Securities and Futures Commission of Hong Kong does not only examine “whether the license application materials are available”，They will also pay more attention to whether the institution truly has the ability to continue operating the 9th category asset management business.。For mainland private equity，The team’s resume must be systematically evaluated before applying.、investment strategy、Risk control system、Compliance system、Source of funds、Customer positioning and future business plans。

Mainland private equity institutions that have obtained Hong Kong license No. 9

A number of well-known mainland private equity institutions have obtained Hong Kong license No. 9，Form a strong demonstration effect。Market statistics in progress，Fushan Investment、Jingtai Lifeng Assets、Bai Fang Assets、ivy assets、Tianma Assets、Infore Capital、Qiju Assets、Yifan Assets、Institutions such as Value Gravity have obtained the “No. 9 License” for asset management business。in，Some institutions have completed and obtained approval in the past one or two years.，There are also some institutions that have completed their licensing arrangements in Hong Kong earlier.。

among large private equity firms，Chongyang Investment、Jinglin Assets、Danshui spring investment、Invest with a pure heart、Zhuque Investment、Oriental Harbor、Yitian Pavilion Investment，As well as Wang Yawei’s top brand assets, etc.，Also obtained Hong Kong license No. 9。Such institutions usually have relatively mature investment management capabilities、Brand foundation and overseas business planning，Therefore, there is more incentive to expand the international market through Hong Kong licensed platforms.。

The main paths and advantages and disadvantages of private equity overseas

Although the No. 9 license is an important compliance option for private equity institutions to conduct overseas asset management business,，But it’s not the only way to go to sea。Current Mainland Private Equity Investment Overseas Markets，Common methods include Shanghai-Hong Kong Stock Connect、QII、Hong Kong licensed platform、Overseas private equity manager channel、QDLP etc.。Different paths in the market、cost、efficiency、Differences in compliance boundaries and sustainability。

1. Shanghai-Hong Kong Stock Connect：Configurable Hong Kong market，However, the investment scope is limited to Hong Kong stocks.，Participating markets and varieties are relatively limited。
2. QII：You can borrow QDII quota from public equity and other financial institutions to invest overseas.，But usually you need to pay the channel fee。As QDII quota gradually becomes tighter，Channel fees continue to increase。
3. Set up a company in Hong Kong and apply for license No. 9：Can issue products and carry out asset management business through licensed platforms，However, both application and operation require a lot of manpower investment、Material resources，The time cost is also higher。
4. Issuing products through overseas private equity managers：Private equity institutions can participate as investment advisors，But you also need to pay a certain amount of channel fees。
5. QDLP：Go overseas through the QDLP quota of overseas asset management companies，Generally applicable to arrangements that directly invest in products of corresponding overseas asset management companies。

Applicable scenarios of QDLP mode

QDLP mainly targets overseas investment products such as overseas hedge funds.，RMB funds can be raised domestically，and invest in hedge fund products of overseas asset management institutions.。Normally，More domestic funds are leaving the country through the QDII mechanism，However, QDII may not be able to invest directly in hedge funds.，More investment in stocks、Asset classes such as bonds。Relevant policies for hedge funds in Shenzhen and other places，Enable investors to raise RMB funds domestically through QDLP quota，and invest funds directly into overseas products。

From the perspective of a private equity manager，QDLP may not be suitable for all institutions，It is more of a choice for investors to allocate overseas markets.。In comparison，9The license is more suitable for those who want to establish their own overseas asset management platform.、Private equity institutions that issue offshore products and operate international business for a long time。

Fees and cost considerations for Hong Kong Type 9 license

The cost of Hong Kong No. 9 license is not only reflected in the application fee，Including staffing、RO cost、office space、Compliance system、Ongoing supervision、audit、law、Operation and time costs。For organizations with long-term overseas business plans，Applying for a license yourself helps establish an independent compliance platform；But for short-term testing or institutions that are not yet mature in scale,，Use the existing No. 9 license holder as a channel，Participate in product issuance as an investment advisor，It is also one of the mainstream models adopted by many institutions.。

OP Asset Management is one of the earlier institutions to deploy related businesses.。It had obtained license No. 9 as early as 2003，And began to enter the Chinese mainland market in the fourth quarter of last year，Providing comprehensive services for mainland private equity institutions in issuing offshore funds。OP Asset Management recently cooperated with Shenzhen Daopu Capital，Daopu Capital plans to launch its first Chinese quantitative long-short strategy offshore fund in the fourth quarter of 2016。

also，on September 1 this year，OP Financial Group and OP Asset Management officially announced，Will invest HK$2 billion in cutting-edge funds on the OP Asset Management Fund platform。Such cases reflect，Platforms with Hong Kong license qualifications are expanding overseas in private equity、Strong ability to undertake offshore fund issuance and cross-border asset management services。

Offshore fund operation model after obtaining license No. 9

After obtaining Hong Kong license No. 9，Private equity firms can generally set up private equity funds in Cayman，And operate through the Hong Kong platform，Under the supervision of the Securities and Futures Commission of Hong Kong，Then trade through a brokerage firm。Customers can participate in subscription through Hong Kong securities firms。This model can be used in offshore fund structures、Hong Kong licensed management、A relatively complete cross-border asset management chain is formed between securities trading channels and investor participation.。

Quantify plans、Long and short、global macro、Hong Kong stocks、US stocks、bonds、For private equity institutions with multi-asset allocation and other strategies，Hong Kong licensed platforms can provide wider market access and a richer selection of tools，But also for compliance、Risk control、Information disclosure and ongoing operations put forward higher requirements。

Business motivations for private equity institutions to accelerate application for No. 9 license

Private equity institutions actively apply for Hong Kong license No. 9，Not just following market hot spots，But by customer demand、Asset allocation pressure、The regulatory environment and the institution’s own development jointly promote。

1. The expectation of RMB depreciation has increased the overseas asset allocation needs of high-net-worth clients and institutional clients.。
2. Domestic market faces asset shortage，Higher cost of capital，Institutions need to explore broader investment opportunities。
3. Domestic regulations are tightening，Some private equity firms hope to establish a more robust business structure through international markets.。
4. The overseas investment system is relatively mature，More investment varieties，More tools to choose from。

The pressure of RMB depreciation is an important reason for the growth of customers’ demand for overseas allocation.。Some domestic clients hope to allocate domestic funds overseas through private placement，To hedge against exchange rate fluctuations and strive for better investment returns；There are also customers who already hold assets overseas，Hope to entrust a private equity institution familiar with its needs with professional management。Since the stock market crash，Risk appetite of some domestic customers has declined，Related product releases in the first half of the year were not ideal，This also drives institutions to find new market spaces。

For quantitative private equity，The attractiveness of overseas markets is also obvious。Since the investment tools available in China are relatively limited,，And stock index futures were restricted，The capacity and execution efficiency of some quantitative strategies are affected。Overseas markets in derivatives、short selling mechanism、More possibilities in multi-asset instruments and liquidity，Therefore, many quantitative private equity funds have gradually participated in overseas markets since last year.。

Policy changes such as Shenzhen-Hong Kong Stock Connect have also increased the demand of overseas investors to allocate Chinese assets.。Private equity institutions obtain compliance qualifications through Hong Kong licensed platforms，Easier to gain recognition from overseas investors，And have the opportunity to connect with funds from overseas institutions。For large private placements，Attract international institutional investors、Expand global fundraising capabilities and enhance brand internationalization，It has become an important strategic target for applying for No. 9 license。

Hong Kong Information Communication Practical Suggestions

We recommend that private equity firms apply for a Hong Kong No. 9 license or transfer a license shell before，Complete a comprehensive compliance diagnosis first。Focus on evaluating RO resources、Management team resume、Investment strategy explainability、Equity structure、Source of funds、internal control、risk management、Audit arrangements、Office content and business plan for the next three years。For institutions with long-term internationalization strategies，Self-built Hong Kong licensed platforms are more independent；For institutions that test overseas product demand in the short term，Then the channel modes can be compared comprehensively、Cost and efficiency of investment advisory model and QDLP and other paths。

9The value of a license plate is not just “getting the license”，What’s more important is whether it can continue to operate in compliance with regulations after acquisition.、Stable release of products、Effectively manage investor relations，And establish a reliable cross-border asset management platform under the regulatory framework of the Hong Kong Securities Regulatory Commission。For private equity institutions，The sooner you start architectural design、Staffing and compliance readiness，The more you can take the initiative in an environment of increasingly stringent approvals,。

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