Bourses belonging to the BRICS Exchanges Alliance will cross-list their benchmark index futures from next Friday, a move designed to encourage investor diversification into participating markets.
The five member exchanges – BM&F Bovespa from Brazil, Russia’s MICEX-RTS, India’s Bombay Stock Exchange, Hong Kong Exchanges and Clearing Limited (HKEx), and the Johannesburg Stock Exchange (JSE) – first announced the initiative in October 2011 at a World Federation of Exchanges' conference in Johannesburg, South Africa.
The arrangement will give investors in the participating markets easier access to BRICS index derivatives which can be used to hedge diversified portfolios.
The derivatives to be cross-listed, offered in local currency and local trading hours across all member exchanges include: Brazil's IBOVESPA futures; Russian MICEX Index futures; India's Sensex Index futures; HKEx’s Hang Seng Index futures and Hang Seng China Enterprises Index futures; and South Africa's FTSE/JSE Top40 futures.
The JSE will also list options on the benchmark futures of the other four member exchanges.
"This initiative gives a lot of opportunities for growth and development as it will allow local investors to diversify and gain exposure to other emerging markets through a locally listed product,” said Ruben Aganbegyan, CEO at MICEX-RTS. “Cross-listing of benchmark equity index derivatives will facilitate liquidity growth in the BRICS markets and will considerably strengthen the international position of the BRICS alliance in the global economy."
HKEx CEO Charles Li added, "These stock indices are excellent indicators of the stock market performance of each BRICS market and are recognised around the world."
The member exchanges plan to develop new equity index related products representing the BRICS economies for cross-listing of derivatives and cash market product offerings. Further joint projects might include product development and cooperation in additional asset classes and services.