HKEx : Keep the pace to stay 1st exchange in Asia

One of HKEx's main achievement in 2012 was the acquisition of the LME, an historical British metal stock exchange. In its 2013-2015 strategic plan, the Kong Kong exchange has great ambitions to make this operation fruitful. Data center, commodities, derivatives, and ETFs are the key drivers for HKEx's future growth. HKEx's company executives have answered our questions on these main issues.

Le 18/02/2014
Annick Masounave

Regarding your multi-asset strategy, will your metal and commodities trading activity exclusively be located in London ? Which metals and commodities will be traded in the future ?

The London Metal Exchange (LME) is looking at a number of potential new contracts. It is also committed to growing its nascent contracts: cobalt, molybdenum and steel.

In addition, preparation has been underway for the introduction of commodities products on HKEx’s Hong Kong platform. The rollout target is the second half of 2014.

You recently signed an MOU with the LME and the CBMX. Do you consider to establish closer ties with this exchange in the future?

HKEx, LME and CBMX [1]signed an MOU on cooperation and the exchange of information in June 2013.  As stated at the time, the MOU marked the beginning of collaboration in the exploration of new products and trade services suitable for the Mainland, Hong Kong and overseas markets.  The MOU is another demonstration of a commitment to expand the LME’s business in Asia.

Closer ties are possible under the MOU, but there are no such plans at this time.

In your strategic plan you announce the creation of a clearing house specialized in metals ; from an organizational point of view, will it be a distinct clearing house ?

HKEx Group is developing LME Clear, a new clearing house in London, for self-clearing at the LME, which is a key part of the Group’s strategy.  LME Clear will aim to provide the safest and most efficient service for members.  The new clearing house is on track for go-live in September 2014.  LME Clear will be able to clear RMB-traded products, and it will be fully compliant with the European Market Infrastructure Regulation, or EMIR.

You announced a partnership with DTCC. Is it a transitory agreement, e.g. could you consider to build your own trade repository in Asia ?

LME Clear has selected The Depository Trust & Clearing Corporation (DTCC), an approved trade repository, as its strategic partner for the new LME reporting service, LMEwire.  The service, powered by LME Clear, will be available by 12 February 2014, the confirmed start date for the reporting obligation for all asset classes, as set out by the European Market Infrastructure Regulation (EMIR).

There are no plans at this time to build an HKEx or LME trade repository in Asia.

Do you plan to sign other significant agreements in 2014 ?

It is possible, but there are no such plans at this time.

Do you see Shanghai and Shenzen stock exchanges like competitors or partners ? What is the ambition of your joint-venture, e.g. CSEC ?

Partners. Achieving a breakthrough in mutual market access via partnership with its Mainland counterparties is part of HKEx’s Strategic Plan 2013-2015, and HKEx will continue its efforts in this regard.

CESC was established with an aim to develop financial products and related services. The three joint venture partners’ vision is for CESC to help promote the development of China’s capital markets, enhance the competitiveness of these markets and promote the internationalisation of the three partners.

Could you give further insights about your strategy towards BRICS, with BRICSMART ?

As initially envisioned, the BRICS Exchanges Alliance has provided a valuable channel for information sharing and cooperation amongst the BRICS Exchanges Alliance members.

On March 30, 2012, HKEx launched cross listed futures representing equity index benchmarks from each of the BRICS markets, thus providing Hong Kong investors easier access to each of the BRICS economies.  This product launch cemented the collaborative relationships between the BRICS exchanges and through the BRICSMART platform, member exchanges have opened unique opportunities for cross product development and collaboration.

With the completion of the cross product listing programme, we continue to work towards expanding the BRICSmart platform and offerings.  The BRICS Exchanges Alliance is evaluating the introduction of new index and index related products representing the BRICS economies and has engaged a global index provider to partner on innovative design solutions. The alliance will provide further updates as developments arise.

Do you plan to deepen ties with other African stock exchanges (apart from JSE) ?

It is possible, but there are no such plans at this time.

London is the first exchange for RMB trading; other European places would like to play a more important role, in the perspective of the liberalization of the yuan. What are the advantages of Euronext in this competition ?

HKEx’s policy is to focus on its own operations and providing quality markets, and to avoid commenting on their possible strengths and weaknesses of other exchanges and exchange operators.

With respect to RMB internationalisation, HKEx is seeking to make the most of the growth opportunities it sees for itself and Hong Kong’s position as the premier offshore RMB centre.

Propos recueillis par Annick Masounave

[1] CBMX : China Beijing International Mining Exchange



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