- New contracts will facilitate the development of a vital risk management tool
- HKEX/MSCI agreement directly responds to international trading communities’ need
Hong Kong Exchanges and Clearing Limited (HKEX) today (Monday) signed a licence agreement with MSCI Inc. (NYSE: MSCI) to introduce futures contracts on the MSCI China A Index, subject to regulatory approval and market conditions.
The MSCI China A Index will comprise 4211 large and mid cap A-shares, on a pro forma basis, accessible via Stock Connect upon the completion of MSCI’s inclusion process in November 2019. The MSCI China A Index will represent the A-share portion of the MSCI Emerging Markets Index.
HKEX Chief Executive Charles Li said: “This new agreement with MSCI will facilitate the development of a key risk management tool for international investors who need to manage their A-share equity exposure.”
“The international trading community has wanted a product like this for some time, and HKEX’s MSCI China A Index futures contracts will directly address their needs,” said Mr Li.
HKEX will inform the market of the launch date of the new contracts and provide detailed product specifications once the launch date has been determined.
HKEX has pioneered the connection between international investors and Mainland China’s equity markets with the launch of the Shanghai-Hong Kong Stock Connect programme in 2014, followed by the launch of Shenzhen-Hong Kong Stock Connect in 2016. The introduction of the MSCI China A Index futures contracts will complement Stock Connect’s access to Mainland China’s equity markets with an effective risk management tool.
Henry Fernandez, Chairman and Chief Executive Officer at MSCI Inc., adds: “With the evolution and sophistication of China’s securities markets, we continue to see increasing participation of global investors who are demanding tools to enhance their risk management capabilities. Having been at the forefront of index construction and maintenance for global investors for 50 years, MSCI is pleased to bring that expertise to the China market and to be selected by HKEX as they bring this innovative development to the global investment community.”
Source: MSCI, Conclusion of the Consultation on Further Weight Increase of China A Shares in the MSCI Indexes, February 2019. The pro forma list of index constituents is based on February 2019 data and will continue to evolve until completion of the inclusion in November 2019.
Hong Kong Exchanges and Clearing Limited (HKEX) is one of the world’s major exchange groups, and operates a range of equity, commodity, fixed income and currency markets. HKEX is the world’s leading IPO market and as Hong Kong’s only securities and derivatives exchange and sole operator of its clearing houses, it is uniquely placed to offer regional and international investors access to Asia’s most vibrant markets.
HKEX is also the global leader in metals trading, through its wholly owned subsidiaries, The London Metal Exchange (LME) and LME Clear Limited. This commodity franchise was further enhanced with the launch of Qianhai Mercantile Exchange, in China, in 2018.
HKEX launched the pioneering Shanghai-Hong Kong Stock Connect programme in 2014, further expanded with the launch of Shenzhen Connect in 2016, and the launch of Bond Connect in 2017.