The securities regulator of China has issued licenses to HSBC Holdings Plc and Citigroup Inc granting the privilege to issue mutual funds. Included in the grant of authority is the approval of expansion of services in the second largest economy in the world.

The said issuances were confirmed by both banks last Wednesday. This is a clear case of the application of the revised rules issued back in 2011, where China would allow foreign banks to distribute and compete with local banks in terms of mutual funds business.

According to HSBC China CEO Helen Wong through an emailed statement, "This product offering not only supplements the existing range of wealth management products offered  by foreign banks, but also broadens distribution channels for local funds."

The fund distribution market of China is dominated by state owned lending institutions such as the Bank of China, China Construction Bank and Industrial and Commercial Bank of China.