SSE and JPX Ink Revised China-Japan ETF Connectivity Agreement

25 Jan 2021

On January 25, 2021, the second China-Japan Capital Market Forum was successfully held online. Fang Xinghai, Vice Chairman of the China Securities Regulatory Commission (CSRC), and Ryozo Himino, Commissioner of the Japanese Financial Services Agency (FSA), attended the forum and delivered speeches. Cai Jianchun, President of the Shanghai Stock Exchange (SSE), was also present at the forum and gave a keynote speech at the roundtable discussion on the Prospects for China-Japan Capital Market Cooperation. Conducting extensive exchanges at the forum were representatives from China and Japan's securities and futures regulators, stock exchanges, futures exchanges, securities industry associations, fund industry associations and futures industry associations.

The signing of the revised China-Japan ETF connectivity agreement by the SSE and the Japan Exchange Group (JPX) was an important result of the forum. At the first China-Japan Capital Market Forum held in April 2019, the two exchanges signed a China-Japan ETF connectivity cooperation agreement for the first time, deciding to join hands to set up an ETF connectivity mechanism for the capital markets in the two countries, which opened a new chapter in the capital market cooperation between China and Japan. The renewal of the cooperation agreement has laid the foundation for the China-Japan ETF connectivity mechanism to further expand the scale of products, increase the product types and broaden the scope of interconnection.

SSE President Cai Jianchun (left) and JPX CEO Akira Kiyota (right) sign the revised China-Japan ETF connectivity agreement.

In one and a half years since the operation of the China-Japan ETF connectivity mechanism, the first batch of products have been running smoothly with good returns, showing the huge potential for the markets in the two countries to expand the cooperation. The China-Japan ETF connectivity mechanism has innovatively pushed the capital market cooperation between both sides to a stage of substantive development, and strengthened the synergy of the two countries in terms of unimpeded economic, trade and financial cooperation; the pioneering development in the connectivity models among the markets in the world has been highly acknowledged in the industry and has enriched both exchanges’ product lines and tool kits for investors’ cross-border asset allocation; the innovative establishment of the collaboration mechanism characterized by the joint participation of market institutions in both countries has stimulated the cooperation potential and competitiveness of market players.

Going forward, the two exchanges will continue to leverage the win-win cooperation spirit of the China-Japan ETF connectivity mechanism, advance talks and mutual learning in the areas of the sci-tech innovation industry, the REITs market and sustainable finance, strive to achieve fruitful results continuously in the cooperation between the capital markets in both countries, and make every effort to open a new chapter of the bilateral financial cooperation.