This undated photo shows a logo of the Hong Kong Exchanges and Clearing Ltd at its building in Hong Kong on Dec 1, 2018. (PHOTO / VCG)
The Hong Kong Exchanges and Clearing Ltd (HKEX) has received approval to launch its first A-share index futures contract, providing a new risk management tool for global investors participating in A-share investments, securities regulators and the HKEX said on Friday.
The Securities and Futures Commission (SFC), the regulator of securities and futures markets in Hong Kong, approved the launch of an A-share index futures contract by the HKEX on Friday, according to a statement from the SFC.
The HKEX said its first A-share derivatives product, a futures contract based on the MSCI China A 50 Connect Index, will be launched on Oct 18
The HKEX said its first A-share derivatives product, a futures contract based on the MSCI China A 50 Connect Index, will be launched on Oct 18.
The MSCI China A 50 Connect Index is designed to have a comprehensive representation of the mainland economy by including 50 stocks of the largest stocks in the China A-share large-cap universe, and by targeting at least two stocks from each sector.
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Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor welcomed the SFC’s approval and thanked the central government for supporting the city in reinforcing its status as an international financial center.
“Launching the A-shares index futures contract in Hong Kong will expand the product scope offering in our capital markets, strengthen Hong Kong's offshore renminbi businesses and deepen the collaboration between the two capital markets, thereby contributing to the further development of the mainland's capital market towards internationalization,” Lam said in a statement.
Hong Kong Financial Secretary Paul Chan Mo-po said the contract could serve as a useful risk management tool for offshore investors participating in the A-share market, and broaden the offering of financial products in Hong Kong at the same time.
Friday's announcement marks a key step forward in furthering the progress of building an offshore mainland equities derivatives suite in Hong Kong, said HKEX Chief Executive Officer Nicolas Aguzin.
In a separate statement, the China Securities Regulatory Commission, the regulator of mainland stock markets, voiced its support for the initiative.
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The move will enrich the risk management tools available to offshore investors who participate in A-share investments, attract more overseas long-term funds into A shares, and consolidate and position of Hong Kong as an international financial hub, according to the statement.
"We will steadily push ahead the reform and opening of the onshore stock index futures market, promoting a coordinated development of onshore and offshore products of A-share index futures," the CSRC said.
The new agreement builds on earlier license agreements between HKEX and MSCI. HKEX has already launched a total of 41 derivatives based on MSCI indices.
With Xinhua inputs
Zhou Lanxu contributed to this report.