New China exchange JV targets Q1 2013 for new index products

A joint venture between Hong Kong Exchanges and Clearing and China’s two domestic bourses has met for the first time to discuss opportunities for creating new financial products.

A joint venture between Hong Kong Exchanges and Clearing (HKEx) and China’s two domestic bourses met for the first time to discuss creating new financial products.

China Exchanges Services Company (CESC), which includes the Shanghai and Shenzhen stock exchanges as well as HKEx, will initially focus on the development and franchising of index-linked and other equity derivatives, the compilation of cross-border indices based on products traded on the three markets and the development of industry classification for listed companies.

The joint venture aims to launch a series of cross-border indices by the end of the year and related index products by Q1 2013 that will be traded on HKEx’s derivatives market.

CESC will also aim to establish standards and information products and include technical services and infrastructure development.

The CESC board, which will be Hong Kong-based, will comprise three directors nominated by each exchange.

Jiang Jianren, chairman of China Investment Information Services and Head of the Shanghai Stock Exchange’s liaison office and Mao Zhirong, director of affairs for the Shenzhen Stock Exchange’s office of Hong Kong, Macau and Taiwan were appointed joint chairmen of CESC.

“The establishment of CESC is an important result of further opening of our capital market and deepened cooperation between the capital markets of mainland China and Hong Kong,” said Jianren. “It will contribute to the building of the offshore RMB market in Hong Kong. In addition, CESC’s products will satisfy the global traders’ needs and allow international investors to use Hong Kong as a key offshore channel to invest in mainland-related products.”