The FTSE Group will take over the calculations for offshore RMB fixed income indices created by the Bank of China (Hong Kong) as part of an agreement to develop a series of new benchmarks.
Five banks currently offer some form of RMB bond index but FTSE Group CEO Mark Makepeace said investors had been unhappy about using an index from a bank they traded with because of the potential for conflicts of interest.
"It's a very competitive market [for benchmarks] but competition is good," he said.
According to Makepeace, FTSE has been eyeing the emerging RMB offshore bond market "for some time" as part of a strategy to capitalise on what has emerged as the preferred RMB route for global investors. Issuance of Hong Kong's so-called dim sum bonds picked up somewhat in Q1 following disappointing issuance of RMB105 billion (US$17.2bn) in 2012.
FTSE had long considered the Bank of China, which compiled the first dim sum index, as its preferred partner in the effort inter alia because of the bank's strong links with the mainland Chinese market. The bank now has four RMB fixed-income indices.
The index provider will in the autumn take over the calculations and rules governing those indices under the oversight of a management committee that will include institutional investors.
Global fixed income markets represent "a significant growth opportunity" for FTSE following a joint venture agreed earlier this month with Canadian firm TMX Datalink that will make the firms' combined fixed-income businesses the third largest provider of exchange-traded fund indices.
Makepeace said the group now planned to target significant domestic bond markets "where we can be the authoritative source", though he declined to specify which market it was likely to target next.