HKEx Prepares For RMB Product Listings
Wednesday, September 07, 2011

As their introduction is a key aspect of the Strategic Plan 2010-2012 of Hong Kong Exchanges and Clearing Limited (HKEx), it has provided an update on its efforts to develop sustainable markets for renminbi (RMB) products.

It has confirmed that both HKEx and the market are ready for the listing, trading and clearing of pure RMB products. Seven RMB-traded debt securities and one RMB-traded REIT have already been successfully listed and are trading on HKEx, and an RMB readiness test has been held to verify operational readiness for dealing in listed RMB-traded securities.

HKEx’s objective is to develop a comprehensive range of sustainable RMB-traded products for its markets. The development of products for listing and trading on an exchange depends on many factors - not only technical and operational readiness (which HKEx has achieved in its securities market and expects to achieve in its derivatives market by year-end), but also market demand and, in the case of RMB-traded products, RMB liquidity in Hong Kong.

Apart from RMB-traded bonds and the RMB-traded REIT, HKEx now looks forward to the listing of other RMB-traded products such as shares, structured products, exchange traded funds and derivatives on its markets at an appropriate time. HKEx confirmed that it will continue to assess all the relevant factors and work closely with market participants on the introduction of different RMB-traded products on its markets.

HKEx, however, reiterated that, if an issuer wishes to remit RMB proceeds to China, it will have to obtain all necessary approvals from the relevant Chinese authorities. The procedure should be similar to the existing arrangement for remitting funds raised in Hong Kong back to China.

It also emphasized that investors and brokers will be able to pay the relevant levies and other costs (such as commission) in RMB. For secondary market trading in RMB-traded securities, brokers will have to pay the Securities and Futures Commission levy as well as other exchange and clearing fees in HKD.

For stamp duty, HKEx’s understanding is that the current legislation requires the stamp duty for securities transactions, including transactions in RMB-traded shares, to be paid in HKD. HKEx is currently exploring with the relevant government agency and brokers as to how it may facilitate stamp duty collection for trading of RMB-traded shares in the secondary market, and make it as efficient as possible.