The Financial Services Development Council has formed a working group to make recommendations to upgrade the Hong Kong’s cross-border «Stock Connect» schemes with the addition of new derivatives linked to mainland shares.
The group – made up of industry experts to engage government officials and regulators – published a paper suggesting the inclusion of equity derivatives or structured products in a move that could lure up to 38 billion yuan ($5.6 billion) per year from global investors.
«Hong Kong’s role, as an international financial center and the investment gateway to and from the Mainland, is underpinned by the wide range
of financial products, stable trading platforms and innovative connectivity schemes that we provide,» said Laurence Li, chairman of the Financial Services Development Council (FSDC), in a statement.
Better Hedging
According to the FSDC, the proposals could address hedging limitations due to stricter mainland rules without risking high disruption by initially restricting access to mainland investors. With only futures and options linked to equity indices and exchange-traded funds available, «the mainland equity market has room for further development when compared to other leading international equity markets in this respect,» the council added.
«Indeed, our listed structured products market is also characterized by its sound regulatory regime, mature market participants and
transparent disclosure of product information,» Li added.
