HK wants more financial exchanges with mainland

Hong Kong Stock Exchange Chief Executive Charles Li Xiaojia hopes there could be more financial market connections between Hong Kong and the mainland based on the model of Shanghai-Hong Kong Stock Connect trading link.

Speaking after confirming he has extended his contract at HKEx for three more years, Li said similar arrangements could be made for the derivatives, commodity, fixed－income, international equity and currency markets between the two.

"We have shown this model can work. It is like we opened a Walmart between the two of us: Now we have a shelf for mainland investors to buy Hong Kong shares, and a shelf called Shanghai for international investors to buy," he told an analyst meeting in Hong Kong.

"Hopefully in months not years, we will also have a Shenzhen shelf, a derivative shelf, a commodity shelf, and international equity shelves, a fixed-income shelf and a currency shelf," he said.

"This is our dream, this is our inspiration, and our job is to make sure it happens."

Li said that HKEx is not telling the central government that "we need to be your exclusive link", or "you need to give us this as a benefit".

HKEx is trying to build more such "connects", he said, because HKEx truly understands the mainland market and its regulations, and is the only one that is able to realistically work with them.

He said he understood that many other stock exchanges around the world might want to work with the Chinese government on similar schemes such as Shanghai-Hong Kong Stock Connect, but he does not believe that could happen.

That is mainly because of the different time zones involved, and the fact the stock-connect program depends on both markets being open at roughly the same time, he said, adding it would be very difficult for London and New York stock exchanges, for instance, to try something similar.

"Tokyo, Singapore and Australia are in the same time zone as Beijing, and they could try to work on a similar program with the Chinese mainland, but I know how hard that would be so I wish them luck," he said.

Li also told the meeting he was happy the HKEx board had approved the renewal of his contract as chief executive for three more years till October 15, 2018.

Li's compensation package remains unchanged with an annual salary of HK$9 million ($1.2 million), and performance-related discretionary bonus and share awards to be recommended by HKEx's remuneration committee and approved by the board, according to a statement. As a full-time employee, Li is also entitled to other benefits in kind and to participate in HKEx's provident funds.

The statement said his compensation package took into consideration the level of responsibility, experience and ability required of a chief executive, and the remuneration offered to similar positions in the financial industry.