Securities regulators in China and Hong Kong have approved the first batch of products under the Hong Kong-China mutual recognition of funds (MRF) scheme, with a number of distribution agreements already in place.

Three out of 17 applications for northbound (Hong Kong to China) sale have won approval from the China Securities Regulatory Commission (CSRC). Four out of more than 30 southbound applications have received the green light from Hong Kong's Securities and Futures Commission (SFC).

The three Hong Kong funds approved to be sold into China are Hang Seng Investments’ China H-Share Index Fund, JP Morgan Asset Management’s Asian Total Return Bond Fund and Zeal Asset Management’s Voyage China Fund.

The four mainland funds approved for sale in Hong Kong are China AMC’s Return Securities Investment Fund, ICBC-Credit Suisse’s China Core Value Mixed Fund, HSBC-Jintrust’s Large Cap Equity Securities Investment Fund and GF Fund Management’s Industry Leaders Mixed Assets Fund.

CSRC spokesperson Zhang Xiaojun said there were far more southbound than northbound fund applications, hence why more funds had been approved by Hong Kong’s SFC.

GF International Investment Management, the Hong Kong arm of GF Fund, has signed up seven distributors for its approved fund, mainly banks. A spokesman for the firm said he expected more funds to gain approval in 2016, and the timing would largely depend on market sentiment and reception of the first batch of funds, as well as how smoothly the process goes.

Zhou Xiaoming, vice general president at Tianhong AM, the mainland agent of Zeal AM, said Tianhong planned to distribute through several digital platforms, such as Ant Fortune, a mobile app of Alibaba’s Ant Financial, to its 200 million clients.

The MRF was launched on July 1 this year with an initial investment quota of Rmb300 billion each way for northbound and southbound flows. But the approval process was delayed due to the CSRC re-allocating its resources to stabilising the A-share market in the third quarter. The first northbound applicants only received their application acceptance letters in early August, as reported.

The programme aims to promote Hong Kong as a hub for fund domiciling in Asia. The number of Hong Kong-domiciled mutual funds with SFC authorisation has risen 15% to 628 funds in the year to September 2015.

In May, the CSRC and SFC jointly said about 100 Hong Kong domiciled funds were eligible for northbound sale and 850 mainland funds for southbound sale. But they have not provided further updates on the number of eligible funds.