Mutual Recognition of Funds scheme marks new milestone in fund passporting, says KPMG

Mutual Recognition of Funds scheme marks new milestone

Commencement of the Mutual Recognition of Funds (MRF) scheme sets the tone for further potential boosts to Asian fund passporting schemes.


Also on

  • Today’s commencement of the Mutual Recognition of Funds (MRF) scheme sets the tone for further potential boosts to Asian fund passporting schemes 
  • However, while some global barriers to fund distribution are falling, others are rising, says KPMG   

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.


 - ENDS -


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:  

  • Types of recognized funds – Qualified funds will be authorized in accordance with mainland or Hong Kong laws and regulations, initially covering simple fund products. The types of products may be expanded. 
  • Eligibility of management firms – Firms can be registered in the mainland or Hong Kong and must be licensed by the CSRC/HKSFC.  
  • Approval/vetting process of funds – Funds will be subject to a streamlined vetting process by the host regulator. 
  • Fund operations – Requirements relating to investment restrictions, dealing, valuation, audit and meetings must comply with the laws and regulations of the home jurisdiction. 
  • Disclosure of information – The host regulator may demand supplementary information on content, format and frequency of update of offering documents. 
  • Investor protection – The HKSFC and the CSRC will strengthen regulatory co-operation and assistance and clearly specify dispute resolution mechanisms. 


For further information please contact: 

Simon Chan, PR Assistant Manager, KPMG

T: +44 (0)207 694 2024

M: +44 (0)7747 564 737


KPMG Press Office:+44 (0)207 694 8773

Follow us on twitter: @kpmguk


About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff.  The UK firm recorded a turnover of £1.9 billion in the year ended September 2014. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 162,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

Connect with us


Request for proposal



KPMG’s new-look website

KPMG has launched a state of the art digital platform that enhances your experience and provides improved access to our content and our people, whatever device you are on.

Read more