Japan Exchange Group (JPX) has signed a memorandum of understanding with Bank of China Limited (BOC), outlining intentions to develop a Renminbi-denominated financial instruments market in Japan.
The memorandum also stipulates that JPX and BOC will work to establish a framework for the clearing and settlement of RMB-denominated products in the Japanese market.
With the memorandum intended as a step towards a long-term partnership between the two groups, JPX and BOC have further committed to sharing information and expertise, as well as personnel, in an effort to reinforce cooperation and collaboration. In doing so it is hoped by both organisations that a greater diversity of RMB-denominated products will become available to both Japanese and Chinese investors.
The deal represents further progress as part of a wider campaign to expand the Chinese currency into foreign markets. In October last year RMB investment directly into China from London was enabled after the City received a Renminbi Qualified Foreign Institutional Investor quota, while only last month China Construction Bank and Bank of China were designated as the official RMB clearing banks for London and the Eurozone respectively.
Japan Exchange Group CEO, Atsushi Saito, commented, “I believe that this [understanding] presents us with a very good opportunity and platform to strengthen the ties between the Japanese and Chinese financial and capital markets. We can expect the development of RMB-denominated products to bring a wider range of options to investors. I also look forward to our contributions to the growing sophistication of the offshore RMB market with the provision of settlement services in Japan by Bank of China.”
Tian Guoli, chairman, Bank of China, added, “This memorandum of understanding marks the start of cooperation between BOC and JPX and I expect this to enable Chinese companies to be listed in the Japanese market and to issue bonds, and every investor to have easier access to RMB-denominated financial products through further globalisation of the RMB market, joint development of RMB-denominated products in the Japanese market, and designing a clearing and settlement infrastructure.”