Shanghai Stock Exchange, China Financial Futures Exchange and Deutsche Börse are to launch a joint venture to develop and to market financial instruments based on Chinese underlyings to international investors outside mainland China.
The venture is designed to support the internationalisation of the Chinese currency; therefore, products will be offered in Renminbi (RMB). The company will be named ‘China Europe International Exchange’ and will commence market operations in Q4 2015. The initial scope of product development will cover cash market products for market launch.
Shanghai Stock Exchange and Deutsche Börse will each own 40 per cent and China Financial Futures Exchange the remaining 20 per cent of the venture. The new company will be incorporated in Germany. Shanghai Stock Exchange is China’s leading stock market, while China Financial Futures Exchange is China’s only financial derivatives exchange.
Along with China’s integration in global economic activities, the cross-border use of RMB is increasing rapidly, and RMB internationalisation has become an important strategy in the process of the opening-up of China’s economy and financial industry. To promote such a strategy, a well-functioning market with offshore investment and trading opportunities is crucial.
“In the context of China’s capital market liberalisation, the offshore trading platform set up by the three exchanges will further promote the two-way opening up of China’s capital market, enrich the product line of the offshore RMB market and accelerate the pace of Renminbi internationalisation. The joint venture is a major step forward in the cooperation between our three exchanges, and I believe it will also be rewarding and fruitful,” says Dr Gui Minjie, Chairman of Shanghai Stock Exchange.
“The establishment of the RMB asset trading platform in Frankfurt by Shanghai Stock Exchange, China Financial Futures Exchange and Deutsche Börse is a milestone for Chinese exchanges and capital market in general. It will help pave the way for further opening up of China’s capital market and contribute to RMB internationalisation,” adds Zhang Shenfeng, Chairman of China Financial Futures Exchange.
“China has developed into an important player for the global economy. The joint venture is meant to support this role further by promoting the internationalisation of the RMB with capital market products. The joint venture is also a result of the excellent relationship amongst the three partners. We feel honoured to participate in this new venture,” says Andreas Preuss, Deputy CEO of Deutsche Börse AG in charge of cash and derivatives markets.