Published On: Thu, Jan 21st, 2010

Closer Cooperation Between the Shanghai Stock Exchange and Hong Kong Exchanges and Clearing

According to an agreement on closer cooperation between the Shanghai Stock Exchange (SSE) and Hong Kong Exchanges and Clearing (HKEx) signed in January 2009, the management of the two organisations will meet on a regular basis to promote continued close cooperation to further mutual development and prosperity and contribute to the country’s economy.

The management of the SSE and HKEx met in Hong Kong on 21 January 2010. The following joint statement was issued after the meeting.

1. The management of the SSE and HKEx exchanged views and discussed their experiences regarding information sharing and cooperation in regulating companies and securities listed in both markets, market infrastructure development, product development, information service development, personnel exchanges, and so forth.

2. Both sides agreed to strengthen information sharing and cooperation in regulating companies and securities listed in both markets. With an increase in A+H share listings, as well as the development of Exchange Traded Funds (ETFs) on A shares and ETFs on Hong Kong stocks, closer ties between the Shanghai and Hong Kong markets have been fostered. The SSE’s Company Management Department and HKEx’s Listing Division will set up a mechanism for regular exchanges, in order to more effectively regulate enterprises and securities listed in both markets and better protect shareholder interests. 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 two organisations will take turns organising the meeting. The same mechanism may be extended to other departments, if proved effective.

3. Both sides agreed to strengthen exchanges and cooperation regarding technology that supports business development. Information technology development, particularly the development of trading and information dissemination systems, is crucial to the stock exchange business. Exchanges and cooperation on technology issues between the two organisations can deepen mutual understanding of the merits of each market’s infrastructure and help further the markets’ business development. The Shanghai and Hong Kong exchanges have their own technological advantages. The SSE’s new generation trading system has cutting edge technology and advanced capacity, while HKEx’s systems support trading, clearing and information dissemination for a variety of products. There is ample room for the technology personnel of both organisations to share expertise, and explore possible ways to develop the respective technology support infrastructure to accommodate further and broader cooperation between the two markets.

4. Both sides agreed to strengthen cooperation in respect of the development of products. ETFs have become the starting point of the two organisations’ cooperation on product development. At present, several Mainland fund management companies are actively making preparations for the issue of ETFs related to Hong Kong stocks. It is hoped future cooperation on ETFs will be extended on a gradual basis to the development of ETFs on bonds and gold, as well as cross listings. Besides ETFs, the two organisations may seek further cooperation in products such as securitised assets, warrants, Callable Bull/Bear Contracts and options. The two organisations jointly participated in a forum on ETF market development last year and agreed to hold a forum in similar format on listed structured products later this year.

5. Both organisations agreed to deepen cooperation in the development of information products. For example, cooperation in compiling an index comprising securities listed in Shanghai and Hong Kong may be explored to increase the Shanghai and Hong Kong stock exchanges’ influence in the global market.

6. Both organisations support continued exchanges and training involving their personnel. The management of the two organisations agreed to meet twice a year to review the progress of exchanges and training, and work out plans for the next year’s exchanges and training. The two organisations will take turns organising the meeting. Training may take the form of meetings during which each side will be briefed on the other side’s market development, or short educational visits to each other’s offices. Last year, the two organisations arranged for their executives to train in each other’s related departments, and agreed to continue the activities.

* The original is in Chinese. This is an English translation.

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