SSE, CFFEX, Deutsche BÖrse Group to Build Joint Venture in Germany
Today, the Shanghai Stock Exchange (SSE), China Financial Futures Exchange (CFFEX) and Deutsche Börse Group entered into a strategic cooperation agreement on jointly developing a trading platform for offshore renminbi financial instruments, planning to set up a joint venture in Frankfurt as the operator for the platform.
For a long time, the SSE and CFFEX have considered the issues of how to improve the internationalization of China’s capital market and how to "go global" for participating in the competition on the international market. In 2013, when talking about the cooperation between the two exchanges, SSE Chairman of the Governors and CEO of Deutsche Börse Group put forward the initiative to set up a trading platform for offshore RMB securities products in Europe and promote the construction of the European offshore RMB market. The discussions and communications in nearly two years have resulted in the cooperation model and operational program recognized by all parties as well as the support and recognition of the regulators and governments of both countries. On March 19 this year, the First China-Germany High Level Financial Dialogue released a joint statement in which Article 17 clearly says: “Both sides support the SSE, the CFFEX and the Deutsche Börse Group’s plan to co-establish a platform to trade offshore RMB financial instruments in Frankfurt.” Later, the three exchanges organized the preparatory teams, having carefully studied the specific operational program for establishing the European offshore RMB securities products trading platform.
The signing of the strategic cooperation framework agreement marks not only the vigorous implementation of the fruitful achievements of the dialog but also another important milestone for the capital market facilitating the internationalization of RMB. According to the agreement, the joint venture will be named “China Europe International Exchange Co., Ltd.”, with the SSE, CFFEX and Deutsche Börse Group holding 40%, 20% and 40% of the shares of the new company respectively. The main purposes of the joint venture are research and development and listing of the offshore renminbi-denominated securities and derivatives products. The new company will be registered and established in Frankfurt, Germany, and it is scheduled to be officially put into operation in the fourth quarter of 2015.
As another important measure of the SSE and CFFEX for supporting the "two-way opening-up of the capital market and RMB internationalization", the “One Belt, One Road” initiative and other national strategies after the introduction of the “Shanghai-Hong Kong Stock Connect”, the establishment of the new joint venture is of great significance.
With China’s economy increasingly integrating with the world economy, the cross-border use of RMB has been more and more widespread and RMB internationalization has become a major strategy for the opening-up of China's economic and financial fields. In order to promote the strategy of RMB internationalization, in addition to exporting large amounts of RMB in trade, investment and other forms, we should also create favorable investment products and places for these offshore renminbi funds. Therefore, from the perspective of further improving the RMB’s international status, the construction of the trading markets for offshore RMB products is of great importance.
The cooperation with the Deutsche Börse Group in developing the European offshore RMB securities products trading platform will give full play to the advantages of the exchanges of the two countries. A variety of RMB securities products will be developed in a short period of time to fill in the blanks of the RMB securities markets in European time zones, provide more choices of investment instruments for overseas RMB funds, and help further expand the opening-up and advance the progress of the RMB internationalization.
The decision-making officials of the exchanges of both sides are full of confidence in the development of the joint venture in the future. Dr. Gui Minjie, SSE Chairman of the Governors, said, “In the context of continuous opening-up of China’s capital market, the three exchanges will jointly invest in setting up the offshore renminbi securities products trading platform in Frankfurt, which will facilitate the two-way opening-up of China’s capital market. It will provide abundant investment instruments for the offshore RMB market and accelerate the pace of RMB internationalization. It is also an important initiative of mutually beneficial cooperation between the Chinese and German exchanges. I believe that the cooperation of the three exchanges is bound to result in fruitful achievements. The joint venture is certain to achieve the common goals expected by the three parties.”
Zhang Shenfeng, Board Chairman of CFFEX, said, “The SSE, CFFEX and Deutsche Börse Group will jointly fund the establishment of an RMB assets trading platform in Frankfurt, which marks a milestone for the domestic capital market and domestic exchanges. The platform will facilitate the accumulation of experience in the opening-up of China’s capital market and contribute to the internationalization of RMB.”
Carsten Kengeter, CEO designate of Deutsche Börse Group, said, “China has developed into an important player in the global economy. The joint venture is not only the result of the long-term sincere cooperation of the three exchanges, but also an important initiative for promoting the internationalization of the RMB through the capital market. Deutsche Börse Group is honored to be part of it.”
After the signing of this strategic cooperation agreement, the preparatory teams of both sides will lose no time to advance the opening of the joint venture in accordance with the plan and strive to put it into operation on schedule.
About Shanghai Stock Exchange
The Shanghai Stock Exchange (SSE) was established on November 26, 1990. The SSE is China's largest and the world's third largest stock exchange. As of May 20, 2015, the SSE ranked third, second and third in the total market capitalization of the stocks, the turnover and the amount of funding among the world's major exchanges.
The SSE is the first and currently the only full-line exchange in China, with the products covering the spot (stocks) and derivatives (stock options) markets.
The SSE is the exchange in China’s mainland with the highest degree of openness. The trading mechanism of "Shanghai-Hong Kong Stock Connect" introduced in 2014 makes the SSE the only securities exchange in China’s mainland with the trading mechanism connected with an overseas market.
The SSE is in transition from a large blue-chip market in the traditional sense to a multi-level market. In 2014, the SSE was approved to enter the market of small-sized companies issuing less than 50 million shares; the SSE plans to launch the board of strategic emerging industries to enter the broader market of innovative companies.
About China Financial Futures Exchange
Consented by the State Council and approved by the China Securities Regulatory Commission, China Financial Futures Exchange (CFFEX) is a financial futures exchange jointly initiated by Shanghai Futures Exchange, Zhengzhou Commodity Exchange, Dalian Commodity Exchange, Shanghai Stock Exchange and Shenzhen Stock Exchange and established in Shanghai on September 8, 2006. Up to now, it has listed five products, including CSI 300 Index Futures, SSE 50 Index Futures, CSI 500 Index Futures, 5-year Treasury Bond Futures and 10-year Treasury Bond Futures, and it is vigorously researching and developing the stock index options, foreign exchange futures, interest rate futures and other products. In the whole year of 2014, the total number of the contracts traded on CFFEX reached 218 million. According to FIA statistics, in 2014 the trading volume of the CSI 300 Index Futures ranked fourth among the stock index futures products in the world.
About Deutsche Börse Group
Deutsche Börse Group is the world's leading securities and derivatives service provider, providing a wide range of products and services for issuers, investors, intermediaries and data vendors worldwide. The businesses of the group cover the whole exchange business chain including trading, clearing, settlement, custody, etc. In addition, Deutsche Börse also offers market data, indices, research and development and operation of information technology systems.
Source: Shanghai Stock Exchange