Hong Kong Exchanges and Clearing (HKEx) and Singapore Exchange (SGX) have agreed to cooperate in promoting the internationalisation of the Chinese renminbi.
They say they plan to do this by looking into joint product development; enhancing connectivity through a presence in each other’s data centres and collaborating on technology development and regulatory issues.
The two exchanges say that they may also work together in relation to extraterritorial market infrastructure regulation that impacts the Asia region.
Signing the memorandum of understanding along with HKEx’s Charles Li, SGX CEO Magnus Böcker said that by including regulatory collaboration in this partnership, their intention was for Asian markets to have a more unified voice regarding regulatory reforms.
More regulatory harmonisation will be needed in this area to accomplish such unity and make it easier for firms to operate smoothly in Singapore and Hong Kong. With an SFC license and Hong Kong exchange membership, a firm can apply for an SGX remote membership and use the connectivity of both Singapore and Hong Kong.
However, with this example, to get remote derivatives membership of the exchange (OTC and listed derivatives) the firm would have to go through the regulatory side of SGX, meaning the firm has to comply with Monetary Authority of Singapore (MAS) rules. Those rules are based on being in Singapore and are not straightforward for firms based elsewhere.