In response to the commencement of the China-Hong Kong Mutual Recognition of Funds (MRF) fund passport scheme, Bonn Liu, head of investment management, Asia Pacific, said: “Today is a new milestone in fund passporting and is another significant distribution opportunity for fund managers seeking to capitalise on a rapidly growing market.
“MRF is part of Beijing’s efforts to allow diversification for Chinese investors and to further internationalise the Chinese currency. It adds to other measures such as Stock Connect and the Renminbi Qualified Foreign Institutional Investor (RQFII) scheme, which have similar aims.
“Within the region, other potential boosts to the industry come in the shape of the APEC Asia Region Funds Passport (ARFP) and the ASEAN Collective Investment Scheme Framework (ASEAN Framework), both of which provide multilaterally agreed frameworks to facilitate cross-border marketing of funds within Asia.”
The development is an example where new fund passports are lowering cross-border barriers, but regional passports, including European initiatives, can have the effect of raising barriers to entry for foreign funds.
Julie Patterson, head of regulatory change in investment management, Europe Middle East and Africa, explained: “Regulation is both lowering and raising barriers to the cross border distribution of investment funds.
“Some barriers to distribution within regions are being lowered. The internationalisation of the Renminbi and the Asian regional passport initiatives create wider distribution opportunities within the region.
“On the other hand, European UCITS have found it more difficult to register and distribute there than in the past.
“The fund distribution landscape is becoming increasingly complex but there are growing opportunities. Only those who have the vision and ability to navigate this environment will be able to capitalise on these opportunities.”
KPMG’s latest report into investment management regulation can be downloaded here.
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Notes to editors:
About the Mutual Recognition of Funds (MRF) scheme
The MRF was first announced in January 2013 and the framework was recently agreed between the Hong Kong Securities and Futures Comission (HKSFC) and the China Securities Regulatory Commission (CSRC) in six areas:
Simon Chan, PR Assistant Manager, KPMG
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