The China Securities Regulatory Commission has authorised the Bank of New York Mellon and Western Securities, a Xi’an, China-based company, to establish a joint fund management venture to tap into China’s $380 billion mutual funds sector.

The new venture, BNY Mellon Western Fund Management, will be based in Shanghai and headed up by Dr Bin Hu, a former senior executive at BNY Mellon Asset Management. It will be 49 per cent-owned by BNY Mellon and 51 per cent-owned by Western Securities.

The fund management company will initially manage domestic Chinese securities in a range of retail fund products, but will over time leverage the size of the BNY Mellon group to expand its range of products, according to a statement issued by the New York-based bank.

BNY Mellon's asset management arm has been granted a Qualified Foreign Institutional Investor (QFII) licence - which allows foreign institutions to invest in Chinese stocks and bonds within a pre-set quota - by the China Securities Regulatory Commission. It is awaiting approval for an initial investment quota from the State Administration of Foreign Exchange.

“We have very ambitious expansion plans for our new company, which include becoming one of China’s leading QFII advisors through actively pursuing QFII sub-advisory deals with foreign institutional investors and providing access to new products in China,” said Dr Hu.