Hong Kong Exchanges and Clearing Limited (HKEx) will tomorrow (Wednesday) list the first Taiwan Exchange Traded Fund (ETF) following a recent agreement reached between the Hong Kong and Taiwan regulators on mutual recognition.

The Hong Kong Securities and Futures Commission ( SFC ) and the Taiwan Financial Supervisory Commission (FSC) on 22 May 2009 agreed to facilitate the cross listing of ETFs between the stock exchanges of Hong Kong and Taiwan.  Under the arrangement, the SFC and the FSC will mutually recognise the other jurisdiction’s ETFs. 

The Polaris Taiwan Top 50 Tracker Fund (H.K.), the first ETF set to debut on Hong Kong’s Main Board pursuant to the said mutual recognition arrangement, is a feeder fund that will invest its assets into a master fund, the Polaris Taiwan Top 50 Tracker which is listed on the Taiwan Stock Exchange.  The benchmark of the master fund is the TSEC Taiwan 50 Index.  The securities market makers for the ETF are Polaris Securities Hong Kong Limited and UBS Securities Hong Kong Limited.

Two other ETFs tracking Taiwan-related indices were listed in Hong Kong prior to the regulatory agreement.  With this latest listing, the number of ETFs on HKEx’s securities market will increase to 36 and the number of ETF managers will increase to nine.

All ETFs listed on HKEx’s securities market are designated for short selling with tick rule exemption.

Investors are advised to read ETF prospectuses in full prior to making any investment decisions.  Information on the various risks of ETFs and their structures is available on the HKEx website and on the SFC website.