HKEx Chief Executive Charles Li and SSE President Zhang Yujun team up to offer better services and products to investors and the financial community. Edmond Tang

Objectives include development of ETFs and structured securities

HONG KONG: Hong Kong Exchanges and Clearing Ltd (HKEx) and Shanghai Stock Exchange (SSE) have announced in a joint statement yesterday that they will take a number of important initiatives to strengthen cooperation.

Top executives from the two bourses met yesterday in Hong Kong to explore ways to strengthen cooperation between two sides.

"Through cooperation and exchanges with our friends at SSE, we can learn more about the behavior and needs of mainland investors and how we can further support the qualified domestic institutional investor (QDII) scheme," said HKEx Chairman Ronald Arculli.

As a result of the discussions, HKEx and SSE have agreed to deepen cooperation in the development of listed products such as exchange listed funds (ETFs) and structured securities.

Several mainland fund management firms are actively preparing for the launch of ETFs related to Hong Kong stocks, said Zhang Yujun, President of SSE.

But he did not provide a schedule for the launch of Hong Kong stock-based ETFs in the Shanghai market, and declined to comment on the initial scale of the ETFs.

"The launching time will largely be determined by the market condition and the pace of preparation by the related fund management companies, while the scale will be determined by their ability to manage, as well as by the market conditions," he said.

Aside form stock-related ETFs, both sides will also seek to develop ETFs based on bonds and gold, as well as to promote cross listings. The two bourses may also seek cooperation in products such as securitized assets, warrants, callable bull/bear contracts and options.

The two bourses also agreed to strengthen information sharing and cooperation in regulating companies and securities listed in both markets.

A mechanism for regular exchanges will be set up by HKEx's listing division and its counterpart in the SSE to more effectively regulate enterprises and securities listed in both markets and better protect shareholder interests.

Moreover, an exchange of views will be held every two months, focusing on the operational issues in the regulation of securities listed in both markets and related information disclosure issues. The same mechanism may be extended to other departments, if proved effective.

HKEx and SSE also agreed to strengthen exchanges and cooperation on information technology that supports business development.

"There is ample room for the technology personnel of both organizations to share expertise, and explore possible ways to develop our respective technology support infrastructure to accommodate further and broader cooperation between the two markets," HKEx Chief Executive Charles Li said.

Both bourses have also agreed to strengthen cooperation in the development of information products including cooperation in compiling an index comprising securities listed in Shanghai and Hong Kong.

The SSE has started the preparation work to compile the index, SSE's Zhang told reporters.

Meanwhile, both bourse operators will continue to exchange their personnel for training purpose. The management of the two bourses will meet twice a year to review the progress of exchanges and training.

(HK Edition 01/22/2010 page3)