HSBC Securities Services is acting as a trustee to four of the six Hong Kong-domiciled funds approved to date for distribution in mainland China under the mutual recognition of funds (MRF) scheme.

The initiative is viewed as a major breakthrough in the opening up of the mainland's funds market to offshore funds.

So far the scheme has made steady progress since the first approvals were granted in December 2015, with northbound (i.e. from Hong Kong to the Mainland) net flows already totalling RMB2.76bn ($410m) to June this year.

A further 10 northbound fund approvals are pending meaning the total assets under management could soon exceed $10bn.

Hong Kong regulators have also approved 42 Chinese funds for distribution in Hong Kong, with around 21 having commenced sales.

Other managers are also likely to firm up plans over the next few quarters.

“The northbound distribution of funds from Hong Kong into China through the Mutual Recognition programme will enrich and diversify the retail fund market in China," said Ian Banks, head of securities services, Asia at HSBC.

“We have worked closely with our clients and the regulators to understand the opportunities. We are pleased to be playing an integral role at the outset of this important industry development.”

Ian Stephenson, global head of fund services at HSBC, added: “China has been gradually transformed from a savings nation to an investment nation with the emergence of middle class and the wealth building up in the last few decades.

“As a result, there is growing demand for a broader range of investment products, which the mutual recognition of funds programme is well-placed to address. In addition to the funds with approvals pending, we are starting to see some large players begin the application process.”