Chief Executive of the Hong Kong Exchanges and Clearing Limited (HKEx) Li Xiaojia (C, front), President of Shenzhen Stock Exchange Song Liping (R, front) and General Manager of Shanghai Stock Exchange Zhang Yujun (L, front) pose for photos during the signing ceremony of forming a joint venture in Hong Kong, south China, June 28, 2012. The Hong Kong Exchanges and Clearing Limited (HKEx) announced Thursday that it has signed an agreement to form a joint venture with the mainland's Shanghai Stock Exchanges and Shenzhen Stock Exchanges, to mainly engage in the development of financial products and related services. The partners, with equal shareholding interest in the new company, will each invest 100 million HK dollars as initial paid-up capital. (Xinhua/Lo Ping Fai)
HONG KONG -- The Hong Kong Exchanges and Clearing Limited (HKEx), one of the world's leading exchange companies by market value, on Thursday agreed a joint venture (JV) in Hong Kong to develop index-linked and equity derivative products with its two mainland counterparts.
The principal business of the JV with the Shanghai and Shenzhen bourses will include "the development and franchising of index- linked and other equity derivative products, compilation of cross- border indices based on products traded on the three markets, and the development of industry classification for listed companies, information standards and information products," according to the announcement.
The new company, expected to be established within three months from the execution of the agreement, will also engage in market promotion, customer services, technical services and infrastructure development, it said.
Under the three companies' agreement, the partners, with equal shareholding interests in the JV, will each invest 100 million HK dollars (12.89 million U.S. dollars) as initial paid-up capital.
The JV's nine-member board will be comprised of three directors nominated by each of the exchanges. Shanghai and Shenzhen stock exchanges will each nominate a joint chairman from their representatives on the board. HKEx will nominate the chief executive from its designated directors.
The Hong Kong Special Administrative Region (HKSAR) government welcomed the establishment of the JV, one of the initiatives announced by Chinese Vice Premier Li Keqiang to support Hong Kong' s financial development during his visit to the city last August.
"The joint efforts of the three exchanges have great strategic significance and mark a milestone in financial co-operation amongst Shanghai, Shenzhen and Hong Kong," Hong Kong Financial Secretary John Tsang said while addressing the signing ceremony.
"First, the JV will support the opening up and reform of our nation's capital market. Secondly, the JV will enhance the internationalization of the three exchanges. Thirdly, the JV, which will be established in Hong Kong by the three exchanges with equal contribution, fully reflects their complementary roles and the benefits of mutual assistance to achieve a win-win situation," he said.
The announcement came before ceremonial events during the weekend to celebrate the 15th anniversary of Hong Kong's return to the motherland and the inauguration of a new HKSAR government led by Leung Chun-ying.
"Building on the many well-established ties among the three exchanges, the new venture will provide a new platform for our cooperation and we hope that it will contribute to the further development of Hong Kong and the mainland's capital markets," HKEx Chief Executive Charles Li said.
Shanghai Stock Exchange president Zhang Yujun said enhancing cooperation with HKEx "will bring about a win-win situation for both Hong Kong and the mainland" as the country continued to open up.
Song Liping, president and chief executive officer of Shenzhen Stock Exchange, said the JV will help increase foreign investors' exposure to the mainland market via Hong Kong.
"In addition, the JV can help raise the mainland capital market 's influence in offshore markets and provide opportunities to explore opening up measures," Song said.
