HSBC becomes one of the first big players to announce its application to take part in the mutual recognition regime for funds that goes live this week.

The Mutual Recognition of Funds scheme between Hong Kong and its mainland neighbour, which officially launched yesterday, has already prompted Hong Kong/London-listed HSBC to apply for two of its funds to be distributed under this system.

HSBC will apply for eligibility of two select funds from its mainland China fund platform to be distributed in Hong Kong under MRF as it starts accepting applications.

The two funds, which are an equity fund and a multi-asset fund, are invested in the onshore Chinese market and managed by HSBC Jintrust, a local joint venture of HSBC Global Asset Management. Subject to regulatory approvals, the funds will be distributed via HSBC’s network in Hong Kong and Bank of Communications Hong Kong Branch's network, a strategic partner of HSBC for MRF, the bank said in a statement.

The MRF is seen as another way that mainland China is opening up its financial and investment markets to foreign investors and increasing the international use of the renminbi currency. Calastone, the funds network, has already explained to this publication what the scheme will mean (see here). Funds deriving from Hong Kong will be allowed for direct public sale within mainland China. Foreign fund managers with a Hong Kong fund range will now be allowed to directly target retail investors in China, a market made up of approximately 300 million investors. Hong Kong investors will obtain direct investment access to Chinese domestic asset managers and funds. 

“MRF will further cement Hong Kong’s position as the key investment centre for international and Hong Kong investors to trade renminbi products. HSBC is strongly positioned to be among the first banks in Hong Kong to provide MRF services to our customers with our leading expertise in RMB, our long established presence and leadership in Hong Kong and mainland China and global capabilities in asset management,” Helen Wong, chief executive of Greater China for HSBC, said.

HSBC Global Asset Management established its investment capability in China back in 1992 when it launched its Chinese equity fund. It received the quotas under the Qualified Foreign Institutional Investor scheme (QFII) and the RMB QFII respectively in 2006 and 2013.