A Chinese national flag flutters outside the office for safeguarding national security in the HKSAR.  Photo: AFP

Security regulators of the Chinese mainland and the Hong Kong Special Administrative Region (HKSAR) on Friday approved the listing of exchange-traded funds (ETFs) on one another's stock exchanges, according to statements.

The Hong Kong Securities and Futures Commission (SFC) authorized two ETFs to be listed on the Stock Exchange of Hong Kong (SEHK) under a program that will facilitate cross-listings of ETFs between markets in Hong Kong and the Chinese mainland.

The program is a testament to the deepening of cooperation between the Chinese mainland and HKSAR capital markets, and it will give investors more opportunities and choices through access to the two markets, according to the SFC.

Ding Meng, an economist at the Bank of China (Hong Kong), said that cross-listings will boost interconnections between the Chinese mainland and Hong Kong markets and facilitate two-way investment.

"With a large number of China concept stocks expected to be re-listed in Hong Kong this year, cooperation between the capital markets of Hong Kong and the Chinese mainland, as well as the connectivity of capital, is very important," Ding told the Global Times on Sunday.

According to security regulators, two Hong Kong ETFs will invest at least 90 percent or more of their assets in an ETF approved by the China Securities Regulatory Commission that is listed on the Shenzhen Stock Exchange. Shenzhen-listed ETFs will invest in Hong Kong ETFs approved by the SFC.

"The current capital flows are realized under the framework of the Qualified Foreign Institutional Investor and Qualified Domestic Institutional Investor. In the future, especially after the launch of the Greater Bay Area Development Plan, it will be more important for the prosperity of the Chinese mainland's and Hong Kong's capital markets to open further and allow two-way capital flows," Ding added.

The ETFs will be listed on their respective markets under existing listing procedures.