The deputy head of Hong Kong’s securities watchdog has dismissed speculation that the new chair of the China Securities Regulatory Commission will hinder the launch of the China-Hong Kong mutual-recognition scheme for funds.

Under the scheme, announced in January by Hong Kong’s Securities and Futures Commission, qualified SFC-authorised funds domiciled in Hong Kong will become “recognised Hong Kong funds”, while Chinese counterparts will become “recognised mainland funds”. These funds could then buy and sell directly into each other’s markets.

Soon after the announcement, the CSRC named Xiao Gang chairman, sparking rumours that Xiao – viewed as more conservative than predecessor Guo Shuqing – would slow the mutual fund programme.

However, SFC deputy CEO Alexa Lam, speaking at the FT Asset Management Summit in Hong Kong last week, brushed off these concerns.

“I haven’t got any indications from the CSRC that [the launch] will slow,” Lam said, insisting that Xiao is in full support of the programme. “The reason is very simple: the CSRC understands that if they are to get to ready for the renminbi to become a widely accepted and used currency, they have to liberalise their financial markets, [and] they know Hong Kong is probably the best place [to] start [the programme].”

She also discarded chatter that mainland Chinese fund houses are not keen on the scheme, as they view it as direct competition to their qualified domestic institutional investor (QDII) programme. (In fact, some argue that certain asset managers, which claim the Chinese funds industry is overcrowded, are even considering lobbying the CSRC to slow the programme.)

Lam says the mutual-recognition scheme is simply another way for China to open its financial markets gradually in a way that keeps mainland regulators comfortable.

Similar to the renminbi qualified foreign institutional investor (RQFII) scheme, which limits the number of firms partaking in the programme, “the mutual fund platform will not open overnight to everybody”, Lam adds. “They will do it bit by bit.

“At this point, we are at the first stage, which is a technical exercise involving the mapping of the two regimes,” she says, noting that as Hong Kong is under a common law framework and China under a civil one, the two regulators are discussing different ways of protecting investors. The regulators will later outline qualification parameters and guidelines.

Lam did not comment on a timeline, although she did say both regulators have formed a group focused on this scheme that meets frequently in Beijing and Hong Kong.