Cross-boundary Wealth Management Connect - Northbound Scheme - Wealth Managemnt Services - Dah Sing Bank

Investment products offered by Mainland banks have not been authorized by the SFC and the relevant offering documents have not been examined by the SFC, and that investors should exercise caution in relation to such offer.

Apart from the risks associated with the wealth management products in which investors invest in with Mainland banks, the Northbound Scheme also involves the following risks:

Exchange rate risks

Hong Kong investors who hold a currency other than RMB will be exposed to currency risks when they invest in a RMB product due to the need for the conversion of the currency into RMB. During the conversion, investors will also incur currency conversion costs. Even if the price of the RMB asset remains the same when investors purchase it and when investors redeem / sell it, they will still incur a loss when they convert the redemption / sale proceeds into another currency if RMB has depreciated. Exchange rates of RMB are quoted in different markets; the onshore rate is being referred as "CNY" and the offshore rate (i.e. when traded in Hong Kong) is being referred as "CNH". When conducting RMB foreign exchange in Hong Kong, CNH will be used. Although CNY and CNH represent the same currency, they do not necessarily have the same exchange rate and may not move in the same direction.

Changes in the exchange rate of RMB will affect the profits and debts, etc. of businesses. Such effects will be more significant to companies engaging in exports and having debts denominated in RMB.

Risks under quota management

Under the aggregate and individual investor quota arrangement, once the aggregate quota or individual investor quota is used up, instructions for funds remittances from Hong Kong to the Mainland under the Northbound Scheme may be put on hold.

Regulatory risks

Investor assets received or held on the Mainland are subject to the applicable laws and regulations of the People's Republic of China ("PRC") which may be different from the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) ("SFO") and the rules made thereunder. Investors should familiarize themselves with and observe the applicable laws, rules and regulations of the PRC concerning the Northbound Scheme. Investors shall also understand the rules and procedures relevant to transactions in the Mainland wealth management product market, and consider their own circumstances before making investment decisions.

Scope and categories of eligible products	Eligible wealth management products under the Northbound Scheme mainly include RMB-denominated deposit products; public fixed income wealth management products and equity wealth management products, with risk rating of "R1" to "R3" (excluding wealth management products for the purpose of cash management); and public securities investment funds with risk rating "R1" to "R4" (excluding commodity futures funds), distributed by banks. Investment products offered by Mainland banks have not been authorized by the Securities and Futures Commission of Hong Kong ("SFC") and the relevant offering documents have not been examined by the SFC, and that investors should exercise caution in relation to such offer.
Aggregate Quota	Remittance to the Mainland under the Northbound Scheme is subject to an aggregate quota of RMB 150 billion initially. The aggregate quota is calculated on a net basis (cumulative remittances from Hong Kong and Macao to the Mainland under the Northbound Scheme – cumulative remittances from the Mainland back to Hong Kong and Macao under the Northbound Scheme). When the usage of the aggregate quota under the Northbound Scheme reaches its upper limit, Hong Kong banks cannot proceed with outward remittance from Hong Kong to the Mainland and can only accept inward remittance back to Hong Kong under the Northbound Scheme.
Individual Investor Quota	Each investor under the Northbound Scheme is subject to an individual investor quota of RMB 3 million. If the investor simultaneously selects both a bank and a securities firm for investment under the Northbound Scheme, the individual investor quota allocated between the bank and the securities firm will be RMB 1.5 million each. Individual investor quota is calculated on a net basis (cumulative remittances from the dedicated remittance account of Hong Kong bank to the Mainland under the Northbound Scheme – cumulative remittances to the dedicated remittance account of Hong Kong bank from the Mainland under the Northbound Scheme). If the amount that an investor plans to remit from Hong Kong to the Mainland exceeds his / her remaining individual investor quota, Hong Kong banks should refuse to remit such funds or only remit the amount of the remaining individual investor quota.
Fund remittance and transfer arrangements	Funds remitted from dedicated remittance account opened with Hong Kong banks can only be transferred to the paired dedicated investment account opened in Mainland banks, vice versa. All cross-boundary remittances between dedicated remittance accounts and dedicated investment accounts should be conducted in RMB.
Investor protection	The transactions carried out by the Northbound Scheme investors via their dedicated investment accounts are subject to the protection of the Mainland laws and regulations and regulatory regime.

Cross-boundary Wealth Management Connect Scheme - Northbound

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