Japan And Shanghai Link ETFs
Japan Exchange Group, Inc. (JPX) and Shanghai Stock Exchange (SSE) will establish “Japan-China ETF Connectivity”, a scheme for creating ETFs that link the ETF markets of both exchanges. Aimed at increasing opportunities for cross-border investment between the Chinese and Japanese securities markets, this scheme is the result of negotiations with the authorities and market participants based on the Memorandum of Understanding concluded between the two exchanges in October 2018.
Under this scheme, a Japanese or Chinese ETF provider will be able to develop a feeder ETF that mainly invests in the counterparty’s ETF after additionally obtaining special investment quota* for this scheme from the State Administration of Foreign Exchange of China.
Henceforth, JPX and SSE will actively collaborate to encourage ETF creation and investment under this scheme and promote the Japanese and Chinese securities markets to investors.
Akira Kiyota, JPX Group CEO, said, “I am very pleased to see the establishment of Japan-China ETF Connectivity. This scheme is the result of our negotiations with SSE and the Chinese and Japanese authorities as well as market participants. We will continue to collaborate with SSE on this scheme and other ways to increase cross-border investment flows between China and Japan as we contribute to the continued development of the capital markets of both our countries.”
Source: Japan Exchange Group
The success of Northbound trading showed electronic execution is way forward for the bond market.
Bank can directly support foreign institutional investors in accessing China’s equities and bond markets.
Both firms are jointly planning for upcoming market and regulatory changes in Hong Kong.
The scheme has become the main channel for international investors to access China’s Interbank Bond Market.
New derivatives facilitate exposure to Chinese equities.