The BRICS Securities and Derivatives Markets - Hong Kong ...

The BRICS Securities and Derivatives MarketsThe BSE, whose shareholders include DB and SGX (5% each), partnered with Eurex of theDB Group to launch SENSEX Index futures and options in Germany in October 2010.However, little or no trading has been recorded since then. In addition, the BSE agreed withthe US International Securities Exchange (ISE) of the DB Group for the introduction ofderivatives based on ISE’s indices in India. However, such products are not yet launched.Separately, the BSE signed a MOU with the Osaka Securities Exchange (OSE) in April 2011for the development of financial markets in India and Japan.To promote sustainable investment practices in its market, the BSE joined in October 2012 theSustainable Stock Exchange Initiative which is promoted by five global exchanges —NASDAQ OMX, BM&FBOVESPA, the JSE, Egyptian Exchange and the Istanbul StockExchange.5. CHINA/HONG KONGMainland China and Hong Kong operate independent securities and derivatives markets,under different rules and regulations and with different market infrastructure. In MainlandChina, there are two stock exchanges ― the Shanghai Stock Exchange (SHSE) and theShenzhen Stock Exchange (SZSE); one financial derivatives exchange ― China FinancialFutures Exchange (CFFEX); and three commodities exchanges ― Shanghai FuturesExchange (SHFE), Dalian Commodity Exchange (DCE) and Zhengzhou CommodityExchange (ZCE) which offer futures trading on commodities. Apart from that, there is anational off-exchange (over-the-counter) trading system ― the Agency Share Transfer System― for the trading of delisted stocks and for technology growth companies. 9 In Hong Kong,HKEx is the dominant exchange operating both the securities and the derivatives market.This section focuses on the stock exchanges and the financial derivatives exchanges in theChina/Hong Kong markets, although the Mainland exchanges are not yet members of theBRICS Exchange Alliance.The China Securities Regulatory Commission (CSRC) is the securities and futures marketregulator in Mainland China. It regulates the exchanges and clearing houses, marketintermediaries, investment fund companies and other service providers in the market. ThePeople’s Bank of China (PBOC, the Central Bank) and the China Banking RegulatoryCommission (CBRC) are responsible for the regulation of the banks which provide servicesfor the securities and futures market. The China Insurance Regulatory Commission (CIRC)is responsible for regulating the insurance companies, including their scope and degree ofparticipation in the securities and futures markets. In the process of gradual market opening,the CSRC works with the other two regulators and other government authorities, including theState Administration of Foreign Exchange, in formulating related policies and regulations.9There are also numerous local equity or property rights exchanges in the Mainland, which provide tradingvenues for the shares and assets of non-listed companies. These are outside the scope of the current article.- 19 - Research & Corporate Development, HKEx31 December 2012