China, Germany Ink Agreement to Set up Exchange

The Shanghai Stock Exchange (SSE), Deutsche Borse Group and the China Financial Futures Exchange (CFFEX) today sign in Beijing a tripartite shareholders agreement on setting up a joint venture, which is witnessed by Chinese Premier Li Keqiang and German Chancellor Angela Merkel.

The set-up of the joint venture one year after the Shanghai-Hong Kong Stock Connect shows the determination and courage of China to push forward the two-way opening-up of the capital market and the internationalization of RMB. The company will be named China Europe International Exchange AG (CEINEX). According to the agreement, the SSE, Deutsche Borse and the CFFEX will jointly invest 40%, 40% and 20% respectively of a total fund of RMB200 million to set up the new company. The company will be headquartered in Frankfurt, Germany. Gui Minjie, Chairman of the SSE, will serve as Chairman of the company’s 1st supervisory board, and Carsten Kengeter, CEO of Deutsche Borse Group, will act as Vice Chairman.

In early 2013, the executives of the SSE and Deutsche Borse proposed to set up an offshore RMB trading platform in Europe, and the CFFEX joined in the program later. After two years of research and discussion, the tripartite cooperation plan gradually took shape and was supported and recognized by the regulators and the governments of the two countries. The plan was officially announced at the China-Germany High-Level Fiscal and Financial Dialogue held on March 17, 2015. The establishment of the company marks the implementation of the important achievement of the dialog.

The CEINEX has been designed to develop a trading and pricing center for offshore RMB assets in Europe, meet the demands of the investors for financing and investing in RMB, create a comprehensive risk management and service platform, and function as important overseas extension and complementation of the domestic capital market. At the early stage, the CEINEX is planned to focus on developing the spot products of securities, which will be denominated and settled in RMB. The financial derivatives will be listed when the conditions are ripe. The first spot products are expected to be officially listed in Frankfurt on November 18.

With regard to the signing of the agreement and the official establishment of the joint venture, Gui said, “The establishment of CEINEX marks a new attempt of the SSE in internationalization, as well as another important symbol of the opening-up of China’s capital market. With Chinese and European economies increasingly integrated, we believe that the CEINEX will provide Chinese and European enterprises with more convenient financial services, meet the demand of overseas investors for investing in RMB-denominated securities products, and play an important role in the process of the opening-up of China’s capital market and the internationalization of RMB.”

“The establishment of CEINEX, a major milestone in the strategic cooperation among our three exchanges and a major step forward in the internationalization of RMB, provides a sound basis for the joint development of the capital markets in China and Europe. We feel very much honored to participate in and contribute to the development,” said Kengeter.

“Aimed at advancing the opening-up of China’s capital market and internationalization of RMB, the CEINEX is of great strategic significance. The three exchanges have now embarked on a new journey, and will make concerted efforts to develop the CEINEX into a trading platform with international competitiveness,” said Zhang Shenfeng, Chairman of the CFFEX.

About Shanghai Stock Exchange

The Shanghai Stock Exchange (SSE) was founded on November 26, 1990. It is China’s largest and the world’s third largest stock exchange. By October 20, 2015, there had been 1,071 companies listed on the SSE, with the total market capitalization of the stocks reaching RMB28.9 trillion, ranking No. 4 in the world, and the turnover and the raised funds ranking No. 2 and No. 1 respectively among the world’s major exchanges.

As China’s first and currently only exchange with the complete product line, the SSE boasts the products on both the spot market (stocks) and the derivatives market (stock options).

The SSE is the exchange in China’s mainland with the highest level of openness. The “Shanghai–Hong Kong Stock Connect” trading mechanism launched in 2014 has made the SSE the only stock exchange in China’s mainland that has linked up with the overseas market through the trading mechanism.

The SSE is transforming from a large sized blue chip market in the traditional sense to a multi-level market. In 2014, the SSE received the approval to enter the market for small-sized companies issuing fewer than 50 million shares. Besides, the SSE is planning to launch the board of strategic emerging industries so as to enter a more extensive market for innovative companies.

About China Financial Futures Exchange

With the approval of the State Council and the authorization of the China Securities Regulatory Commission (CSRC), the China Financial Futures Exchange (CFFEX) was jointly founded by the Shanghai Futures Exchange, the Zhengzhou Commodity Exchange, the Dalian Commodity Exchange, the Shanghai Stock Exchange and the Shenzhen Stock Exchange on September 8, 2006 in Shanghai. So far, the CFFEX has listed a total of five products, namely, CSI 300 index futures, SSE 50 index futures, CSI 500 index futures, 5-year treasury bond futures and 10-year treasury bond futures, and is vigorously researching and developing the stock index option, foreign exchange futures, interest rate futures and other products.

About Deutsche Börse Group

As a world’s leading provider of services in securities and derivatives, Deutsche Börse Group offers extensive products and services to issuers, investors, intermediaries and data vendors. The businesses of the group cover the entire process chain such as trading, clearing, settlement and custody. In addition, the group also provides market data, indices, research, and development and operation of information technology systems.

Source: Shanghai Stock Exchange