The Securities and Futures Commission and Commission de Surveillace du Secteur Financier have signed a mutual funds recognition agreement in order to cooperate further, bring about more cross border fund sales and trade more information.

The South China Morning Post reports that on the sidelines of the Asian Financial Forum, Luxembourg’s Minister of Finance Pierre Gramegna told the Post that the agreement will significantly benefit the fund industry in both markets.

“A high percentage of UCITS funds sold in Hong Kong are domiciled in Luxembourg, which shows that there are strong links between Hong Kong and Luxembourg,” Gramegna said. “The mutual fund recognition agreement will allow a faster approval process of standard retail fund products for both markets.

“The agreement will allow more fund choices for investors in both markets. It is important for the long-term development of the fund industry between Hong Kong and Luxembourg.”

UCITS, otherwise known as the Undertakings for Collective Investment in Transferable Securities, is a regulatory framework based in Europe for the management and sale of mutual funds.

Luxembourg-domiciled funds are distributed in over 70 markets worldwide, including Hong Kong.

SFC data reveals that 1,037 mutual funds sold in Hong Kong are domiciled in Luxembourg, which make up 47% of 2,185 mutual funds authorised by the SFC as of September.

The SFC had signed other similar cross border fund sales agreements over recent years, ranging from with mainland China to Western Europe. The agreements play a role in the Hong Kong government’s efforts devoted towards earning the city the reputation of an international asset management centre.