Hong Kong regulators have granted an in-principle nod to expand Wealth Management Connect to the brokerages in the city, reported Bloomberg citing people aware of the development.

The move is subject to applications and other requirements. It will also require approval by mainland Chinese regulators.

Opening up of the scheme to brokerages will further increase the competition for participating banks for an estimated $500m in annual fees.

A spokesperson for Securities and Futures Commission (SFC) declined to comment when approached by the news agency.

Launched last year, Wealth Connect facilitates cross-border investments in the Greater Bay Area, consisting of Hong Kong, and southern mainland cities including Shenzhen and Guangzhou.

The scheme, which garnered participation from around 13,000 individual investors in the first month, currently has a line-up of 23 approved Hong Kong banks, including HSBC and Citigroup.

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Hong Kong Investment Fund Association (HKIFA) welcomed SFC’s move to expand the scheme to brokerages but said that improvements should also be looked at, according to the report.

HKIFA chief executive Sally Wong told the news agency that the programme needs to bolster the scope of products that lenders can offer.

At present, the banks are only allowed to offer low-to-medium risk products. 

Wong also said that the ‘execution-only’ model that prevents lenders from offering advise also needs to be changed.

Under the current rules, certain Hong Kong lenders are approved to deal in securities and take part in retail banking or private banking business.

According to the SFC registry, there are 1,487 corporations, including brokers and asset managers, with the same license as of December 2021.

In July last year, a report by SCMP said that French asset manager Amundi was looking to take advantage of wealth management connect scheme.