FiNETIK – Asia and Latin America – Market News Network

Asia and Latin America News Network focusing on Financial Markets, Energy, Environment, Commodity and Risk, Trading and Data Management

BMV Mexican Stock Exchange’s Market Performance Report January 2010

Click here to download  SE_BMV Mexican Stock Exchange’s market performance report for January 2010

Source: BMV , 26.02.2010

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BMV- Bolsa Mexicana de Valores – December 2009 Performance Report

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BMV – Bolsa Mexicana de Valores – June 2009 Performance Report

BMV – Bolsa Mexicana de Valores – May 2009 Performance Report

BMV – Bolsa Mexicana de Valores – April 2009 Performance Report

BMV – Bolsa Mexicana de Valores – March 2009 Performance Report

BMV – Bolsa Mexicana de Valores – February 2009 Performance Report

BMV – Bolsa Mexicana de Valores – January 2009 Performance Report

BMV – Bolsa Mexicana de Valores – December 2008 Performance Report

BMV –  Bolsa Mexicana de Valores – November 2008 Performance Report

Filed under: BMV - Mexico, Exchanges, Latin America, Mexico, News, , , , , , , , , , , , , ,

The bumpy road to the international A-share trading board

While government officials and listing candidates are enthusiastic about the launch of the planned trading board, there are several hurdles that remain unresolved.

Designed to allow overseas companies to list shares on China’s major stock exchange, Shanghai’s highly anticipated international trading board is being heralded as a way to provide a powerful lift to the country’s equity markets in the year of the tiger, but it is turning into a paper tiger, experts say.

The planned board, which has been under discussion for years without tangible progress, was brought into the spotlight again last summer after government officials revealed the Chinese authorities’ determination to launch it. However, key issues such as share sale limits, the use of funds raised through share sales, accounting standards, and listing requirements remain unresolved.

Companies aiming for the international board first need to comply with Chinese accounting standards. However, it is very unrealistic to require companies with assets all over the world to comply with Chinese book-keeping rules and auditing standards, industry experts say.

Every year, the translation of an audit report based on general international standards into the Chinese accounting format could cost a typical company from $5 million to more than $10 million extra — an expense that all cost-conscious financial executives would want to avoid, experts say.

Another issue is that the nation’s corporate and securities laws currently only apply to domestic companies, and Chinese lawmakers are not ready to restructure the legal framework and make it more adaptable for foreign companies that want to offer A-shares.

The preparation of HSBC’s highly anticipated Shanghai share sale is suspended for “at least six months”, sources familiar with the deal said last week, citing technical problems in the listing process.

Also, with China running a top-down, command-and-control economy, the current review and approval procedure for the country’s equity capital market is an obstacle for foreign companies, strategists argue.

“Listings in China receive too much intervention by the government,” said Lou Gang, a China strategist at Morgan Stanley. “Launching an international board would test the current system for launching IPOs (initial public offerings),” he said.

Even so, apart from HSBC, other global players such as Standard Chartered Bank and the New York Stock Exchange have also expressed their enthusiasm for listing on the international trading board.

While overseas issuers are concerned about China’s listing regulations, Chinese investors and regulators are worried the outsiders will soak up too much liquidity from the country’s equity market.

The cautious sentiment among investors is evident in online forums in China, where the planned international trading board is hotly debated. Some say the foreign companies will take advantage of the Shanghai market’s high offering prices and valuations and make use of the stock exchange as an automatic teller machine.

Others warn that HSBC’s listing will absorb funds worth as much as 20 Nanpu Bridges in Shanghai — one of the longest highway bridges in the world, with a total construction cost reaching Rmb820 million ($120 million).

“HSBC will take 20 Nanpu Bridges away from us,” one forum participant wrote. “Don’t let the irrigation fertilise others’ fields,” wrote another.

Analysts suggest the authorities should require foreign companies to re-invest the proceeds from their share sales exclusively in China or give approval only to red-chip companies, which are registered overseas but with most of their assets and operations on the Chinese mainland.

Generally, regulators and market observers concur that the introduction of foreign company listings is a must and will help improve the country’s equity markets and accelerate the process of making the Chinese yuan freely convertible.

“Foreign company listings will set a good example for domestic companies in China,” said Wei Sun, Morgan Stanley’s China CEO.

Tu Guangshao, Shanghai’s vice mayor and a former vice-chairman of the China Securities Regulatory Commission, said at the Asian Financial Forum in Hong Kong last month that the municipal government strives to build the city into an international financial centre and that the creation of the planned board is in progress.

The international trading board was first brought to the table by Unilever Company in 2000 when the US retailer of personal care products expressed its interest in an A-share listing in a bid to strengthen its network and brand-name penetration in China. Discussion about the board has been under way ever since, but a concrete plan has yet to be made.

Commerce minister Chen Deming said at an investment conference in Xiamen last September that China will certainly allow listings by qualified foreign invested companies on the mainland stock exchange.

PricewaterhouseCoopers predicted last month that the board will start trading in the second half of this year. The new board may help the Shanghai Stock Exchange (SSE) to raise up to Rmb300 billion ($44 billion) through IPOs this year, overtaking its Hong Kong counterpart, which is forecast to raise HK$300 billion ($39 billion), the international accounting firm said.

Source: FinanceAsia.com,19.02.2010 by Lillian Liu

Filed under: China, Exchanges, News, , , , , , ,

HKEx And Shanghai Stock Exchange Agree On New Cooperation Initiatives

Hong Kong Exchanges and Clearing Limited (HKEx) and Shanghai Stock Exchange (SSE) have met today to discuss the Closer Cooperation Agreement they signed in January of last year.  The agreement commits the two organisations to work together more closely towards the common goals of mutual prosperity and contributing to the greater development of China’s economy.

“Through cooperation and exchanges with our friends at SSE, we can learn more about the behaviour and needs of Mainland investors and how we can further support the QDII (Qualified Domestic Institutional Investor) scheme,” said HKEx Chairman Ronald Arculli.  “We can also learn from each other about the market dynamics created by the growth and development of SSE and HKEx, and the latest market trends in the Mainland and Hong Kong.

“According to an old Chinese saying, a single tree cannot make a forest,” Mr Arculli added.  “Jointly with our Mainland counterparts, we can accelerate China’s growth and financial development in a prudent manner.”

As a result of recent discussions, HKEx’s Listing Division and SSE’s Company Management Department will establish a mechanism for regular exchanges, in order to more effectively regulate companies and securities listed in both Shanghai and Hong Kong and better protect shareholder interests.  Views will be exchanged every two months, with the focus on operational issues, including information disclosure by listed issuers.  The two organisations will take turns organising the meetings.

HKEx and SSE also agreed to strengthen exchanges and cooperation on information technology that supports business development.  “The Shanghai and Hong Kong exchanges have their own technological advantages.  There is ample room for the technology personnel of both organisations to share expertise, and explore possible ways to develop our respective technology support infrastructure to accommodate further and broader cooperation between the two markets,” HKEx Chief Executive Charles Li said.

In addition, HKEx and SSE have agreed to seek further cooperation in product development and to hold a forum on listed structure products later this year.

Since signing the cooperation agreement in January last year, HKEx and SSE have also started a market data collaboration programme, shared information on the development of Exchange Traded Funds and other products, and arranged for HKEx executives to train at SSE and vice versa.

HKEx believes its cooperation with SSE strengthens the two organisations’ positions in today’s rapidly changing financial market environment.

The management of the SSE and HKEx met in Hong Kong on 21 January 2010.  The following joint statement was issued after the meeting.

1. The management of the SSE and HKEx exchanged views and discussed their experiences regarding information sharing and cooperation in regulating companies and securities listed in both markets, market infrastructure development, product development, information service development, personnel exchanges, and so forth.

2. Both sides agreed to strengthen information sharing and cooperation in regulating companies and securities listed in both markets.  With an increase in A+H share listings, as well as the development of Exchange Traded Funds (ETFs) on A shares and ETFs on Hong Kong stocks, closer ties between the Shanghai and Hong Kong markets have been fostered.  The SSE’s Company Management Department and HKEx’s Listing Division will set up a mechanism for regular exchanges, in order to more effectively regulate enterprises and securities listed in both markets and better protect shareholder interests.  An exchange of views will be held every two months, focusing on the operational issues in the regulation of securities listed in both markets and related information disclosure issues.  The two organisations will take turns organising the meeting.  The same mechanism may be extended to other departments, if proved effective.

3. Both sides agreed to strengthen exchanges and cooperation regarding technology that supports business development.  Information technology development, particularly the development of trading and information dissemination systems, is crucial to the stock exchange business.  Exchanges and cooperation on technology issues between the two organisations can deepen mutual understanding of the merits of each market’s infrastructure and help further the markets’ business development.  The Shanghai and Hong Kong exchanges have their own technological advantages.  The SSE’s new generation trading system has cutting edge technology and advanced capacity, while HKEx’s systems support trading, clearing and information dissemination for a variety of products.  There is ample room for the technology personnel of both organisations to share expertise, and explore possible ways to develop the respective technology support infrastructure to accommodate further and broader cooperation between the two markets.

4. Both sides agreed to strengthen cooperation in respect of the development of products.  ETFs have become the starting point of the two organisations’ cooperation on product development. At present, several Mainland fund management companies are actively making preparations for the issue of ETFs related to Hong Kong stocks.  It is hoped future cooperation on ETFs will be extended on a gradual basis to the development of ETFs on bonds and gold, as well as cross listings.  Besides ETFs, the two organisations may seek further cooperation in products such as securitised assets, warrants, Callable Bull/Bear Contracts and options.  The two organisations jointly participated in a forum on ETF market development last year and agreed to hold a forum in similar format on listed structured products later this year.

5. Both organisations agreed to deepen cooperation in the development of information products.  For example, cooperation in compiling an index comprising securities listed in Shanghai and Hong Kong may be explored to increase the Shanghai and Hong Kong stock exchanges’ influence in the global market.

6. Both organisations support continued exchanges and training involving their personnel.  The management of the two organisations agreed to meet twice a year to review the progress of exchanges and training, and work out plans for the next year’s exchanges and training.  The two organisations will take turns organising the meeting.  Training may take the form of meetings during which each side will be briefed on the other side’s market development, or short educational visits to each other’s offices.  Last year, the two organisations arranged for their executives to train in each other’s related departments, and agreed to continue the activities.

Source: MondoVision, 21.01.2010

Filed under: China, Data Management, Exchanges, Hong Kong, Market Data, News, Reference Data, Risk Management, , , , , , , , , , , , , , , , ,

China braces for index futures; Fund experts sceptical about Chinese firms managing futures

China’s fund managers may get some nasty surprises once the newly approved stock index futures market finally kicks off. The main worries are a lack of expertise and limited investment in risk management.


China seems set on delivering market shocks at the turn of a new decade. Not only has it decided to rein in excess liquidity by raising bank reserve rates, it has finally announced its plan to develop stock index futures, after years of delay. (No doubt held back by some of the failed experiments with bond futures in the 1990s.)

On the upside, the general belief is that investors should benefit from enhanced transparency, deeper market development, product enhancement, and so on. This long-standing list was set out by market observers and foreign experts years ago. There’s no need to repeat it all here.

However, the is less consensus from consultants and fund-rating agencies on how stock index futures will affect the fund management sector. Analysts and research heads at Morningstar, Lipper and Z-Ben Advisors appear unconvinced about the ability of Chinese firms to manage these instruments.

Not that fund managers are authorised to join this new development yet. For now, only 11 authorised brokerages that have been approved to participate in the pilot schemes to trade the contracts have the qualifications to do so.

These 11 firms will only be able to express market views at an index level for the CSI 300 index. They aren’t likely to be able to do much at the individual stock level. Indeed, regulators have said little about the actual schedule of the futures market’s development.

The question then arises: If only vanilla instruments are available, will the futures market lead to product diversification for Chinese fund managers now trapped in the strait-jacket of a plain-vanilla world?

Maybe. Li Haiqing, fund analyst at fund-rating agency Morningstar in Shenzhen, says some primitive form of 130/30 strategies is likely to emerge in China. But that will happen first among the private funds that are not regulated by the securities regulator or are under the radar of the State Council’s strategic plans — not among the fund management houses. (Long/shorts, serious forms of arbitrage strategies, are something much further down the road.)

The best fund managers in China work for private houses these days, not mutual fund managers. Because they are not regulated, they are able to put together more flexible products. And they have the support of high-net-worth customers, who can take higher risks and have deeper pockets to support investments in trading platforms and risk management expertise.

The scene at mutual fund houses, meanwhile, is at best uneven. Xav Feng, head of research for China and Taiwan at fund-rating agency Lipper, reckons most fund houses have done “studies” on the new-fangled ideas of hedging tools. More are working their way up the learning curve, and most are simply not ready.

The lack of experienced people who can even understand the risks is a big worry. Talent supply simply to deliver good results from plain-vanilla securities is stretched, let alone expertise in innovative instruments.

Among the industry’s 10 oldest mutual fund houses, for example, only three can claim to employ the local asset management industry’s longest-serving fund managers. China Asset Management Company has Fang Jun, who served as a portfolio manager at China AMC for some five years and Han Huiyong for around six years. Shanghai’s Hua An boasts Shang Jimin, who can claim a little over six years of experience. Harvest has Shao Jian, with close to six years.

There’s an increasingly common polarised structure at these older firms, with a handful of senior managers at the top and a base of young managers with short track records. Hua An may have Shang Jimin, but other than Shang, there is a long list of individuals with experience ranging from around 20 days to little more than a year.

Similarly, at Shenzhen’s China Southern, at the top there is Chen Jian, with nearly four years under his belt, and below him a group of managers, each with one to two years of experience.

“There is a long way to go,” Lipper’s Feng says. Apart from the talent factor, more importantly “there needs to be enough liquidity for index futures. If not, it would be a disaster for fund managers”. Both Feng and Morningstar’s Li reckon the underlying support of margin provisions — the availability to secure leverage — is key to the success of index futures.

As per usual in China, big securities reforms make great promises for the long term. In the short term, the picture lacks clarity and can be worrying.

“Index futures will increase the volatility of the Chinese market in the short term, because investors are not familiar with it,” Feng says. But the market shock likely to come from the launch of futures might just be a stimulus for managers to strengthen their risk management techniques for the longer haul.

At present, Chinese mutual funds’ risk exposure is overwhelmingly centred towards equity risk premium. Over the long term, theoretically, they would do better to diversify to other sources of risks — for example, through credit, liquidity and manager skill.

Yet the reality is that managers have little business in asset classes beyond equities, which is their bread and butter, and managers are mostly unable to deliver returns purely through skill (the fabled search for alpha) that are uncorrelated from market exposure (beta).

Their only current means of managing risk is through asset allocation — managers could sell equities and park their proceeds in cash, bonds or cash-equivalent instruments. (For that reason, overseas investors — or reporters — questioning Chinese managers about their risk management practices often proves futile.)

Stock index futures should help change that.

Zhang Haochuan, analyst at industry research house Z-Ben Advisors, has seen little movement in the hiring of professionals or in the investment in trading platforms specifically in preparation for stock index futures or margin trading.

AsianInvestor sources suggest Beijing-based Harvest and China AMC, Guangzhou-based E-fund and even Shanghai-based Hua An might have been the early movers. These firms have been trying hard to recruit quantitative risk management talent in Hong Kong in recent months, albeit sporadically.

Zhang says larger firms that have been caught in CSI 300 index fund launches over the past year will have more incentive and resources to mobilise suitable expertise.

There are 16 CSI 300 (largely identical) index funds on the market now. Two of these are enhanced products with built-in leverage.

As an unintended result of their multi-billion-renminbi launches last year, these 16 houses have more skin in the game than the rest of the industry. China AMC’s CSI 300 product, for example, raised Rmb20 billion ($2.93 billion) in July. It is their business to start paying attention to these new concepts of securities innovation and risk management.

Source: AsianInvestor.net, 15.10.2010

Filed under: Asia, China, Exchanges, News, Risk Management, Trading Technology, , , , , , , , , , , , , ,

China Index Futures get Regulatory approval

The government on Friday gave the green light for stock index futures, margin trading and short selling in a milestone move that ends the one-way trade in the capital market.

An official with the China Securities Regulatory Commission (CSRC) said on Friday that the State Council has approved stock index futures, short selling and margin trading “in principle”. The regulator said it would take three months to complete preparations for index futures.

The new tools would protect investors against losses and also help them to profit from any declines. Until now, Chinese investors could only profit from gains in equities.  Analysts said the announcements are unlikely to cause any sharp volatility in the A-share market next week as the rumors have already been factored in.  “The market is unlikely to see huge fluctuations next week as the introduction of new financial tools has been discussed for years,” said Zhang Qi, an analyst with Haitong Securities.
Index futures are essentially agreements to buy or sell an index at a preset value on an agreed date. Investors can also borrow money to buy securities or borrow securities to sell under the business of margin trading and short selling.

Zhang said the move would be positive for blue-chips and heavyweight stocks as the contract would be initially based on China’s CSI 300 Index that tracks the 300 biggest shares traded in Shanghai and Shenzhen.

“Index futures are expected to bolster the market value of blue-chips,” he said.  Large listed securities firms such as CITIC Securities and Haitong Securities will also
directly benefit from the new business and could see a surge in their revenues, Zhang said.  Analysts expect the new tools to improve liquidity by attracting more capital into the equity market as the government plans to cut back bank lending to 7.5 trillion yuan ($1.1 trillion) in 2010 from last year’s 9.21 trillion yuan.

China’s securities regulator has been considering the introduction of index futures since 2006 when Shanghai set up the China Financial Futures Exchange to prepare for the running of the new mechanism. The plan had been held up till now along with the proposals for margin trading and short selling.

In 2007, CSRC chairman Shang Fulin said that the infrastructure and regulations needed for index futures and margin trading are in place.  Institutional investors are expected to be the mainstay of the new business as the threshold is high for retail investors who are more vulnerable to potential risks, said analysts.

It is estimated that the trading of stock index futures will take about three months to set up. Investors will need to deposit a minimum of 500,000 yuan in order to open an account to trade in stock index futures.

China will select high-quality brokerages to launch the short selling and margin trading of stocks on a trial basis.

Source: Sohu.com/CITIC NewEdge, 08.01.2010 by Liang Haisan

Filed under: Asia, China, Exchanges, News, Risk Management, , , , , , , , , , , ,

Shanghai Stock Exchange Corporate Bond 30, Overseas-listing A Shares, State-Owned 100 Indices Launched

The Shanghai Stock Exchange (SSE) and China Securities Index Co., Ltd. (CSI) have recently announced that nine new indices will be launched on the first trading day of 2010, namely, the SSE Corporate Bond 30 Index, the SSE Overseas-listing A Shares Index, the SSE Local State-owned Enterprises 50 Index, the SSE State-owned Enterprises 100 Index, the SSE Large & Mid & Small Cap Growth, Value, Relative Growth and Relative Value Indices and the SSE Shanghai Enterprises Index. All these indices will provide more targets for such index products as index funds and ETFs.

The SSE Corporate Bond 30 Index, the first real-time bonds index in China, is composed of 30 high-quality, large-scale and high-liquidity enterprise bonds from the SSE. The index, giving priority to the liquidity of the constituents, has adopted the weight restriction rule to reduce the influence of some constituents with large issuance volumes on the index. Besides, the duration matching rule is also designed to keep the deviation of the duration for the index and that for the market at or below 10%. The SSE Corporate Bond 30 Index is significant for the bond market development as it offers high-quality targets for bond ETFs and other bond products. On December 16, 2009, the index closed at 100.38, 0.38% higher than the beginning of the year.

A few overseas listed companies, upon returning to the A-share market in succession since 2006, have become an important sector in the A-share market and exerted a growing influence on the market. The constituents of the SSE Overseas-listing A Shares Index are listed companies’ stocks in the SSE 180 Index that are simultaneously listed on the SSE and exchanges outside the mainland. The 37 constituents boast the A-share total market capitalization and negotiable market capitalization of RMB9.1977 trillion and RMB4.5783 trillion, respectively, accounting for 50.38% and 40.79% of that of the SSE, respectively.

The SSE State-owned Enterprises 100 Index, composed of 50 constituents of the SSE Central SOEs 50 Index and 50 of the SSE Local State-owned Enterprises 50 Index, could reflect the overall performance of the listed companies of state-owned enterprises in Shanghai. Constituents of the SSE Local State-owned Enterprises 50 Index are 50 most typical stocks selected from listed companies in Shanghai that are controlled by local state-owned assets supervision and administration commissions, governments and state-owned enterprises.

The compiling method of the SSE Large & Mid & Small Cap Style Indices, basically the same with that of the SSE 180 Style Indices, is to select among the SSE Large & Mid & Small Cap Index the stocks of 150 companies with most remarkable growth features as the constituents of the growth indices, and the stocks of 150 companies with most remarkable value features as the constituents of the value indices. In terms of the SSE Shanghai Enterprises Index, with the constituent universe covering companies registered in Shanghai, have the constituents of 50 companies taking the lead in liquidity, scale and representativeness to reflect the overall market performance of Shanghai-based companies’ stocks.

Source: MondoVisione, 18.12.2009

Filed under: Asia, China, Exchanges, News, , , , , ,

QDII:Chinese index products face obstacles

Meanwhile, Chinese investors should buy foreign assets, and ETF/index products are the most efficient way to do so, say panellists at a recent conference.

The development of index products has made some progress in China, but still faces key issues, according to panellists at an event this month in Shanghai. They also argued that Chinese investor education must be addressed before the qualified domestic institutional investment (QDII) market will really take off.

The SG China Markets Forum, organised by French bank Société Générale, focused primarily on the QDII, with one panel discussing index product development in China.

That panel comprised: Song Hong Yu, head of research at China Securities Index; Zheng Xu, director in the international cooperation and product development department at Yinhua Fund Management; Zeng Fan Qing, head of product development at Fortune SGAM; Joseph Ho, head of ETF sales and marketing at Société Générale; and Frank Benzimra, director of equity derivatives structuring at SGI Index, part of Société Générale.

The index market has continued to grow, they said, thanks to the high liquidity of indexed products, economies of scale, deepening of product knowledge, and increasing demand for both risk management and an improved legal framework.

However, there remain problems affecting the market’s development, including asset managers’ strategies of seeking higher commissions by selling actively managed funds, said the panellists. The situation is exacerbated — as in Japan and South Korea — by regulations allowing the same securities house to sell active funds and exchange-traded funds (ETFs), the former with a significantly higher profit margin.

Nor do system limitations help matters. The separation of the Shanghai and Shenzhen stock exchanges are slowing the pace of ETF development in China, argued the panelists. And ultimately there is a lack of dedicated market educators — again, as in Japan and South Korea — since industry players are unwilling to take up this role due to the aforementioned conflicts of interest over active/passive fund selling.

As for investing in overseas assets, ETFs/indices are the most efficient and cost-effective way to manage a global portfolio, argued panellists. And despite the strong performance of the Chinese market this year, there are still good reasons for investors to buy foreign assets, including: sharing of growth in global economic developments, diversification, limited local investment tools apart from equity investments, and expensive pricing of shares on Chinese stock exchanges.

So how much Chinese money is likely to flow overseas — and where — under the revised QDII scheme? That was the subject of another panel at the event. The participants were: David Chang, assistant president at GuoTai Asset Management; Dong Bin, head of QDII at Citic Securities; Sandru Lu, a lawyer at Llinks; and Du Jun, head of institutional investment at Fortune SGAM.

The consensus was that there will be a huge increase in product applications under the QDII scheme, which now stands at $90 billion. However, the main issues hindering the market’s growth are insufficient investor education and expertise.

Local investors should not only take a close look at the legal framework of all the investable products when considering overseas assets and should not only focus on returns. More, panellists felt that the Lehman Brothers bankruptcy and aftermath has affected local investors’ understanding of overseas markets, meaning there will be a discrepancy between local and foreign investors’ understanding and execution, even for very simple products.

For overseas markets, it was pointed out, there are more stringent rules and strategy, whereas for the local market there is more flexibility in execution. The panellists felt that a better way to approach this situation is to combine the two approaches.

As for where domestic investors should put their money, participants felt commodities is a promising asset class, due to dollar weakness and the lack of precious metals/resources. They also suggested making some allocation to overseas structured products/derivatives to help achieve a stable return, and for those with a higher risk tolerance making use of statistical/quantitative strategies.

With reference to managing a full global/China portfolio, Citic said it will put 30% in the local market, 30% in overseas markets, 20% in hedge funds and 20% in strategic products. GuoTai will put a large portion in China and India.

Source: AsianInvestor.net, 30.11.2009

Filed under: Asia, China, Exchanges, News, Risk Management, , , , , , , , , , , , ,

SSE Shanghai Stock Exchange new trading system NGTS to go live on Nov 23th

After years of elaborate preparations and several tests on the whole market, the New Generation Trading System (NGTS) of the Shanghai Stock Exchange (SSE) will be put into operation on November 23, 2009 upon approval by the China Securities Regulatory Commission. Systems directly connected to the SSE such as that of the securities companies will be simultaneously switched at that time.

Putting the new trading system into use is a systematic project covering wide areas and involving complicated technologies. The SSE has made careful and ample preparations to ensure the smooth operation of trading.

What’s more, the bourse has formulated relevant contingency plans for possible risks. In case of any abnormal trading resulting from malfunction of the system, the bourse will take necessary measures in time according to the “Detailed Implementation Rules on Handling Abnormal Trading of the SSE (Trial)”. If the trading can not be carried out in a normal way due to the system’s malfunction, the bourse will close the market. And if the trading can not be resumed on the day when the system goes wrong and on the following day, the bourse will switch back to the existing system for trading.

Q&A by SSE on Switch, launch of New Trading System (NGTS)

Q: Would you please introduce to us the construction of the SSE new trading system and the significance of its launch?

A: Thanks to the rapid development of China’s capital market in the last few years, the SSE’s stock trading volume grew by leaps and bounds from the daily average of RMB7.156 billion in 2002 to RMB138.8 billion in 2009. As links at China’s securities market, including issuance, listing, trading and communication, heavily depend on technology, the market keeps propelling us for technical innovations. From the perspective of the global market, the upgrading of trading system is inevitable for market development.

Since November 2004, the bourse has been well on the way to the development of the new trading system. By October 2007, the overall design and software development of the system had been completed, with about 160 key documents under 53 subclasses of 13 categories compiled and approximately 1 million lines of codes for pure source program delivered. The model of the online version, finalized in April 2009, has been at the stage of synchronous operation and maintenance since late June. At present, the last-minute preparations for the switch are under way orderly.

The SSE’s new trading system, inheriting the advantages of the current system, learning from the characteristics and merits of overseas stock trading systems and meeting the long-term development needs of China’s capital market, is a fruit of technical integration and re-innovation.

The smooth launch of the new system, a booster of the bourse’s core competitiveness, is of great importance to the construction of the SSE into a world-class exchange in terms of technical security. First, the SSE provides a powerful guarantee for future market development through improvement in processing and safety capability of its trading system. The new system boasts a peak order processing rate of about 80,000 orders per second, with an average order delay 30% shorter than the current one. The system’s daily bilateral volume of not less than 120 million orders is equivalent to the daily volume of RMB1.2 trillion on a single market and quadruples the maximum peak value ever recorded in the bourse, with a capability of parallel expansion. Moreover, the system, technically more reliable, is capable of ensuring the steady operation under the circumstance of peak data flow. Second, a solid foundation is laid for the SSE’s exploration into international business by ensuring easier access to the technical interfaces for all participants at home and aboard. Third, the SSE’s role in leading industry technical advancement is given full play by tapping up the new channel to future upgrading of technical systems of its members and other market participants. Fourth, an ideal platform is established to support the SSE’s simulated transaction business, custody business, multi-variety-and-platform business in the future.

Q: What are the arrangements for the switch of the old trading system to the new one and the launch of the new system?

A: The launch of the new trading system is scheduled for November 23 (Monday). The switch and launch falls into three stages: 1. Launch preparation period: all pre-launch preparations will be rounded off before 24:00 on November 20 (Friday). 2. Switch period: the switch from the current system to the new one will be wound up between 00:00 on November 21 (Saturday) and 24:00 on November 22 (Sunday). 3. Trial run period: focus will be put on the operation of the new system to eliminate possible risks from November 23 to December 4. After the end of the trial run, the current system will be shut down. During the trial run period, in case of failure in normal transactions due to technical drawback of the trading system, the SSE will announce market closure. If the trading on the very day and the following day can’t be resumed due to melt-down of the new trading system, the SSE will fall back on the current system for trading resumption.

Q: What preparations has the SSE made for the launch of the new system?

A: The SSE, in the principles of active preparation, steady promotion and step-by-step implementation, has devoted countless hours to the careful preparations for the launch of the new system. So far, preparations for the new system in terms of system, market and bourse have all been in place.

First, the system is ready to go. Since June 2009, the SSE has organized several rounds and batches of all-around tests, special pressure tests and special destructive tests participated in by market participants with a view to verifying the system’s functionality in usability, robustness, high capacity, anti-destructive attack, network monitoring and system monitoring as well as the operating team’s response competence.

The 3 all-around online tests organized by the bourse since October this year have achieved expected results, indicating that the new system is qualified for its launch.

Second, the market is fully prepared. With the completion of prophase laboratory test, on-the-spot access test and overall market training, the SSE officially kicked off the preparations for the launch of the new system by market participants in May 2009. In July and August this year, all market participants including securities companies and fund companies were grouped into 6 batches and underwent 7 all-around tests. According to the inspection results of examination and acceptance, all market participants have completed their preparations for technology and business. The subsequent 3 all-around online tests further proved that all member units and other market participants have got everything ready for the launch.

Third, the bourse itself is ready. After elaborate preparations, the business operation platform of the trading system, the internal business process, the trading hall, the business operation team, the contingency treatment mechanism related to the new trading system as well as the service integration with the back-end depository and clearing system are ready. All this ensures the smooth operation of the new trading system upon its adoption.

Q: What measures have the SSE formulated to ensure the launch of the new trading system?

A: To ensure the smooth and safe launch of the new trading system, the SSE has established a command center for overall direction and coordination during the switch stage. The command center is divided into five working groups of technology switch, technology operation, business operation, relevant systems and comprehensive affairs. In the “special guarantee” month for the adoption of the new trading system since November 2, the SSE will take guarantee measures at the highest level according to the system switch progress.

Besides, the SSE has also made thorough arrangements on the following issues. To begin with, it has strengthened the risk prevention capabilities of member units, keeping close watch on those large in scale with complex technical system, those under reorganization currently, those adjusting the technical systems before and after the launch of the new trading systems, and those lagging behind in technical strength. The SSE has set up a technical service group to provide technical support for members at any time. Meanwhile, a service hotline for the launch of the new system is open to keep in touch with the market.

Next, the internal risk prevention of the bourse has been intensified. In line with the principle of “prevention first, quick response, timely disposal and less impact”, the SSE has kept improving its ability of quick response, recognition and disposal towards all kinds of risks and relevant technical failures based on the previously formulated contingency schemes.

Lastly, the implementation of businesses spanning over one day will be suspended. The SSE will suspend the implementation of businesses spanning over one day related to the product issuance such as the IPO of new products (A shares, B shares, bonds, funds and warrants) and additional issuance from three working days before the adoption of the new system to five working days after the successful switch (from November 18 to 30).

Q: How will the adoption of the new trading system affect the securities companies and other market participants? What are the SSE requirements upon them?

A: While the new trading system is put into operation, systems of the securities companies and other market participants that are directly connected to the SSE will be simultaneously switched to the new system. Market participants shall, in accordance with the general planning of the SSE on the adoption of the new system, make relevant technical and business preparations to ensure the safe and smooth launch of the systems directly connected to the SSE.

In its “Notice of Making Preparations for Launch of New Trading System” in May 2009, the SSE required that the securities companies, fund companies and relevant market participants form the special working groups led by their senior management members. In the recent mobilization meeting of the whole market, the SSE asked all units to, in the light of its organizational mechanism and safeguarding measures, pay much attention to and spare no effort in the implementation of various work as required. The SSE also specified in a notice the following requirements: firstly, market participants shall carefully study relevant documents on system switch and do a good job in publicity and mobilization. Secondly, they shall form the working groups for the switch and designate personnel in charge. Thirdly, apart from keeping the communications smooth and efficient, they shall give the feedback in time if any problem should crop up. Fourthly, they shall work out the operational schemes and contingency plans for the system switch on the member’s side. Related personnel shall be know how to carry out relevant processes and plans to avoid manual operating errors.

Q: How will the adoption of the new trading system affect the investors?

A: The previous trading methods of investors who are directly using the business systems of various securities companies will not be affected by the adoption of the new system. Undoubtedly, the shift of the new system into use is a systematic project covering wide areas and involving complicated technologies. The SSE has made corresponding contingency plans for possible risks to minimize the influence on the investors’ trading.

The new system, yet to-be-launched, with improved match efficiency and ability, safeness and reliability, will allow the investors to trade in a safer, easier, more fair and efficient way.

Q: What contingency measures have the SSE adopted against the emergencies that may crop up in the launch of the new trading system?

A: To ensure a safe system launch, the SSE will promptly deal with the abnormal conditions during the launch according to the issued “Detailed Implementation Rules on Handling Abnormal Trading of the SSE (Trial)”. Firstly, it perfected its contingency plan regarding all possible risks during the system launch and perfected the specific measure for each risk and breakdown situation. Secondly, it established the joint contingency mechanism with China Securities Depository and Clearing Corporation Limited to deal with all kinds of risks involving the registration and settlement during the new system launch. Thirdly, it issued the “Guidance on Contingency Treatment for Market Participants’ Trading of the SSE” to urge the market participants to form the working groups of trading contingency treatment during the trial run period. The working group shall work out the contingency plans and direct the contingency treatment. In addition, the SSE also tried to maintain the market stability through sufficient communication with the investors.

Source: SSE, 17.11.2009

Filed under: Asia, China, Exchanges, News, Risk Management, Trading Technology, , , , , , ,

Hong Kong: First A-share Industry Sector ETFs to Debut on HKEx

Hong Kong’s Exchange Traded Fund (ETF) market further expands with a series of five Mainland A-share industry sector ETFs setting to debut on Wednesday, 18 November on the Stock Exchange of Hong Kong Limited (the Exchange), a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (HKEx).

The new Mainland A-share index ETFs are:

Stock Code Name of ETF Benchmark index
2846 iShares CSI 300 A-Share Index ETF CSI 300 Index
3050 iShares CSI A-Share Energy Index ETF CSI 300 Energy Index
3039 iShares CSI A-Share Materials Index ETF CSI 300 Materials Index
2829 iShares CSI A-Share Financials Index ETF CSI 300 Financials Index
3006 iShares CSI A-Share Infrastructure Index ETF CSI 300 Infrastructure Index

With the listing of these five new ETFs, there will be a total of eight ETFs on Mainland A-share indices listed on the Exchange, and HKEx will be the first exchange with Mainland A-share industry sector ETFs.

All ETFs listed on the Exchange, including these five new iShares listings, are designated for market making and for short selling with tick rule exemption.  The market makers for these five ETFs are Citigroup Global Markets Asia Limited, Credit Suisse Securities (Hong Kong) Limited and UBS Securities Hong Kong Limited.

On 18 November, the Exchange will have listed 42 ETFs.  There are eight ETFs on Mainland A-share indices, seven on Hong Kong equity indices, 22 on other regional and international equity indices, two on commodities and three on bonds and money markets.

The three other Mainland A-share index ETFs are:

Stock Code Name of ETF Benchmark index
2823 iShares FTSE/Xinhua A50 China Index ETF FTSE/Xinhua China A50 Index
2827 W.I.S.E. – CSI 300 China Tracker CSI 300 Index
3024 W.I.S.E. – SSE50 China Tracker SSE50 Index

Investors should note that all A-share ETFs use derivative instruments to synthetically replicate the performance of the underlying benchmarks.  These ETFs are subject to counterparty risk of the derivative instruments’ issuers and may suffer losses if such issuers default or fail to honour their contractual commitments. For a better understanding of the risks involved, investors are advised to read the ETFs’ prospectuses in full prior to making any investment decisions.  Information on the various risks of ETFs and their structures is available on the HKEx website.

Source: MondoVisione 17.11.2009

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China QDII: Overseas ETFs on Agenda of Chinese Fund Managers

Chinese fund managers are preparing overseas exchange-traded fund products, though there is not a timetable yet for the approval of such products.

Chinese fund managers are planning overseas exchange-traded fund products in response to the decision by the State Administration of Foreign Exchange to grant overseas investment quotas to two companies.

SAFE, the regulator of China’s foreign investments, granted overseas investment quotas of US$1 billion to E Fund Management and US$500 million to China Merchants Fund on Oct. 23. It is expected to grant further quotas this year, Caijing has reported.

Penghua Fund Management Co. is preparing to launch a series of ETFs tracking global indices. It has licensed indices from MSCI Barra, including MSCI USA, MSCI Emerging Markets, and MSCI EAFE, which tracks stocks in Europe, Australasia and the Far East, a Penghua employee said. The ETFs will launch next year at the earliest, the employee said.

China Asset Management Co. is preparing a fund tracking the Hang Seng Index, said a source from the fund manager. An industry source said the funds will be launched on the Shanghai Stock Exchange.

The emergence of these exchange-traded funds could lead to capital flight, but the new funds will still be subject to regulations and quotas on foreign exchange that govern the Qualified Domestic Institutional Investors, Caijing reported. The overseas ETF operations are included under the total QDII quotas.

The Shanghai Exchange will be a testing ground for these overseas exchange traded funds, according to a source at Bosera Asset Management. Bosera had earlier won the development rights to an ETF tracking the Shanghai exchange.

According to Barclays Global Investors, as of June 30, 2009, there were 1,070 EFTs, run by 93 assets management companies, with US$789 billion under their management.

Source: Caijiang, 04.11.2009 by Zhang Bing

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Shanghai Stock Exchange Central SOEs ETF launched

October 27 witnessed the 1st ETF, namely, the SSE Central State-owned Enterprises ETF Index Fund, on the market in 3 years after General Manager Guo Tehua of ICBC Credit Suisse Asset Management Co., Ltd. (ICBCCS) and President Chen Geng of Guotai Junan Securities Co., Ltd. stroke the gong to announce the opening of trade on the Shanghai Stock Exchange (SSE) that day. The new product provides the investors who keep their eyes on the sector of the state-owned enterprises (SOEs) with another high-efficient investment instrument. All this will further activate the SOEs sector and ETF trading and attract more investors by offering more opportunities for investment in the SOEs.

Relevant officials from the SSE and China Securities Index Co., Ltd. as well as nearly a hundred of guests from several securities dealers and assets management institutions extended their congratulations. ICBCCS General Manager Guo Tehua and SSE Vice President Liu Xiaodong signed the “Agreement on Listing”.

It is learnt that the SSE Central SOEs ETF, the 1st listed ETF in 3 years and the first of its kind ever in China, tracks the SSE Central SOEs Index, which pools 50 stocks of listed companies of SOEs with large market capitalization and sufficient liquidity on the SSE. So, it is also called the “super SOEs blue chip”. Benefited from the RMB4 trillion economic stimulus plan of the state and the increasingly speeding process for reorganization of SOEs, the value of investment in SOEs has long been cherished by the investors. Statistics show that in 2009, such indicators as the P/E and P/B ratios of the SSE Central SOEs Index are the lowest among the main indices. By October 21, 2009, the average P/E ratio of the SSE Central SOEs 50 Index had been 22.16 times, lower than that of the SSE Composite Index of 26.63 times, that of the SSE 50 Index of 23.24 times and that of the CSI 300 Index of 25.75 times. Over RMB3 billion were achieved through online cash subscription in a single day, raising 4.5 billion units from a great many excited subscribers during the period of issuing SSE Central SOEs ETF.

The securities code for listing and trading of SSE Central SOEs ETF is “510060”, with the code for subscription and redemption of “510061”. Investors can trade the fund on the secondary market in the same way of purchase and sale of stocks. Besides, they can also make subscription and redemption for the fund through the package portfolio of constituent stocks of the SSE Central SOEs Index on the primary market, with a minimum requirement of 1 million fund units for each lot.

Source: MondoVisione, 29.10.2009

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Shanghai Stock Exchang International listing Board on track

Positive signals for an international board on the Shanghai Stock Exchange point to a nearing launch. But major obstacles remain.

A growing din within financial circles suggests China’s proposed international board for foreign company stock trading is on the runway and approaching takeoff.

On September 8, Commerce Minister Chen Deming said at an investment conference in Xiamen that China would indeed allow listings by qualified foreign invested companies on mainland exchanges.

The same day, CITIC Securities International Chairman Ted Tokuchi said at a Caijing conference that if the Chinese stock market remains stable, a first draft for board listing rules could be released after China’s national holidays in early October. The news drove the A-share Shanghai Composite Index up 1.7 percent to close the day at 2930 points.

One or two foreign companies are expected to list through the board on the Shanghai exchange early next year, announced Fang Xinghai, director of the municipal Shanghai Financial Office, while describing Shanghai’s effort to build a new trading platform during a London visit in mid-September.

In another positive signal, Caijing learned that the China Securities Regulatory Commission (CSRC) has set up a working group under CSRC Vice Chairman Yao Gang that’s specifically dedicated to the task of building an international board.

At the Shanghai exchange, General Manager Zhang Yujun is in charge of a separate working group preparing for the board’s launch. And it’s been confirmed that the yuan will be the currency for all trades.

Nevertheless, several key issues remain unsettled. Yet to be decided are questions about accounting standards, listing requirements, share sale limits, and rules governing how raised funds can be used.

Indeed, there are plenty of controversies that could affect the launch of the international board, for which an official target startup date has not been announced. At worst, unsettled issues could park the project on the runway.

Longing to List

Tokuchi said up to six foreign companies have shown interest in listing on the Shanghai exchange. These include the banks HSBC and Standard Chartered, and the stock exchange NYSE. “It is very likely that they will list in the next two to three years,” he said.

Responding to a recent rumor that a red chip company would list on the Shanghai market this year, Tokuchi said that listing may be delayed until 2010. But he said the first company to list on the international board probably will be a red chip company.

A source tied to regulators told Caijing that a stable stock market could lead to a speed-up in preparations for red chip stocks now trading in Hong Kong to join the A-share market. Reportedly, these would include China Mobile and CNOOC.

Tokuchi predicted two to three companies, including red chips and foreign invested companies, would list on the Chinese stock market next year. Over the next five to six years, 20 to 30 companies will list. And within 15 years, he said, more than 100 mature companies will have listed on the Shanghai exchange.

According to Tokuchi’s analysis, foreign companies willing to list in Shanghai are mainly multinationals with fairly big stakes in China. Companies such as NYSE and HSBC aim to further integrate China into their global strategy maps.

However, some foreign companies are quite reserved about listing in Shanghai. Key reasons include listing requirements, fund-raising target rules, share price differences and delisting requirements.

Step By Step

The public first heard an official proposal for opening an international board in April 2007, when the Shanghai Stock Exchange released a Market Quality Report suggesting a new way for overseas companies to issue A shares.

CSRC released a draft regulation for a pilot program a month later, allowing overseas red chip companies to list on the A-share exchange. But for various reasons, the red chip A-share return plan was postponed two years.

Two years passed before the State Council confirmed that Shanghai would be promoted as an international center for finance and shipping – a move that brought the idea of an international board back to the table. After that, for the first time, CSRC and Shanghai exchange officials added the international board concept to the government’s working agenda. Last May, exchange chief Zhang publicly called for steadily advancing preparations for the international board.

Tu Guangshao, deputy mayor of Shanghai and former CSRC deputy chairman, later said overseas companies should be given access to the A-share exchange as part of the city’s long-term goal to build an international financial center.

Technical Bumps
Some technical issues, such as what kind of accounting standard should be used, market pricing and whether companies on the international board should be required to invest in China, are still being discussed.

Industry professionals say it’s unrealistic to require companies to comply with certain Chinese bookkeeping rules. “It is too costly for an international company with assets all over the world to comply with Chinese auditing standard,” said Zhu Junwei, general manager of capital markets with UBS Securities.

Changing to Chinese from international accounting could cost a company from US$ 5 million to more than US$ 10 million. “This is not even a one-time charge,” Zhu said. “Every year, a listed company would have to pay auditing fees.”

A senior executive at a securities firm, who asked not to be named, said international board listings should not follow in the footsteps of so-called panda bonds — yuan-denominated bonds issued by foreign companies in China.

Friction was apparent in October 2005 when International Finance Corp. (IFC) issued 1.13 billion yuan in pandas, and the Asia Development Bank used the bonds to raise 1 billion yuan. Both offered the bonds on interbank markets.

Neither issuer would accept a Chinese regulation requiring panda bonds to comply with Chinese accounting standards. After lengthy negotiations, IFC and the bank were exempted from the accounting rule and allowed to follow international credit rating and accounting standards. But they paid a price: Their bond offers were postponed several times by regulators.

Zhang recently told Caijing, “Listed companies on the international board should comply with Chinese regulations.” But he also noted that, as the nation’s corporate and securities laws currently only apply to domestic companies, the legal framework should be restructured for foreign companies that want to list A shares.

Other technical challenges surround IPOs. Lou Gang, a China strategist with Morgan Stanley, said launching an international board would test the current system for launching IPOs.

“With too much intervention by the government, listing access has become an asset,” Lou said, adding that the current review and approval procedure has become an obvious obstacle.

China could learn from its neighbor Japan, which set up an international board in the 1980s. By 1991, up to 131 foreign companies had listed on the Tokyo Stock Exchange.

Later, with the collapse of an asset bubble, many foreign companies delisted. And in April 2004, the Tokyo exchange canceled its foreign division. It then gave foreign and domestic companies equal rights and status.

Chen Changjie, an attorney with local law firm Guangda, said Japan’s international board failed due to a complex, tedious review and approval process.

Another issue for architects of a Chinese international board is that the proposal has intensified competition between Shanghai and Hong Kong.

“This affects the status of Hong Kong and Shanghai, and which one is more important,” said a Beijing-based securities executive. “In the environment, in which the yuan currency is not exchangeable, Shanghai can hardly be called an international financial center.

“All these issues are not easily resolved in the short term,” said Lou. “So the international board does not present a rosy picture.”

Source: Caijing Magazine, 15.10.2009 by staff reporters Fan Junli and Shen Hu

Filed under: China, Exchanges, News, , , , , , , , , , , , , ,

SAFE new QFII Quota transfer restriction to limit foreign A-Share speculation

China’s foreign exchange reserve agency has issued a new rule to discourage speculations in A-share markets.

(Caijing) Restrictions on the transfer of investment quotas under the Qualified Foreign Institutional Investor program are likely to discourage short-term investment in China’s A-share market, fund managers and analysts said.

The State Administration of Foreign Exchange released new rules on Oct. 10 raising the upper limit on quotas for a single investor under the QFII program to US$1 billion from US$800 million, to “encourage medium- and long-term foreign investment in China securities.”

Investors have also been prohibited from transferring or selling their quotas to other institutions, according to the new rules.

At present, most overseas hedge funds invest in the A-share market with quotas leased from QFII program members, fund managers said.

An A-share investment manager with an overseas fund told Caijing that with the release of the new rules, some foreign investors are likely to shift their focus to A-share index products sold on the international market.

Other investors with longer-term commitments will consider applying for QFII license from Chinese government, “though it would be a lengthy and arduous process,” said the manager.

Shanghai-based consultancy Z-Ben Advisors Ltd. said in a recent report that the new SAFE rules are aimed at encouraging long-term investment while curbing speculation in the A-share market.

Z-Ben analyst Hu Miao said in the report that SAFE’s previous rules allowed the transfer or sale of QFII quotas to some extent, facilitating the flow of speculative funds in and out of China.

SAFE’s new rules carry the threat of reduced or cancelled quotas for QFII participants if they are involved in “illegal activities in using their foreign exchange by transfer or sale of investment quotas.”

FiNETIK recommends: SAFE sets new rules for QFII and QDII portfolio investors in China 13.10.2009

According to Z-Ben’s estimates, foreign brokerage investors under the QFII program have won quotas totaling US$ 9 billion to 10 billion to date, of which 1.5 to 3 billion may have been leased to unapproved investors.

At the end of August, SAFE had granted total quotas of US$15.3 billion to 76 QFIIs, which had remitted US$13.8 billion into China for investment.

Source: Caijing, 15.10.2009 by staff reporter Wu Ying

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Charles River Development Expands Global Reach with Beijing Office / 拓展全球业务 – 建立北京办事处

Charles River Development (Charles River), a front- and middle-office software solutions provider for investment firms, today announced the expansion of its global operations with a regional office in Beijing, China. Located in the Excel Centre in the Financial Street area of Beijing, the office is staffed with experienced Charles River employees and multi-lingual Chinese nationals who provide China-based investment managers with professional implementation, consulting and support services. Charles River’s client base in China includes China Life Asset Management Company, the country’s largest institutional investor.

“The opportunity to invest in international securities has increased Chinese asset managers’ demand for front- to middle-office systems that can support complex investment strategies including domestic Chinese instruments, products and workflows,” said Tom Driscoll, Managing Director, Global, Charles River Development. “The Charles River Investment Management System (Charles River IMS) can address any specific regulation, asset class, trading or language requirements our Chinese clients might have.”

Charles River IMS is available with full Chinese language capability and supports over 35 Chinese security types and associated workflows. Clients can use the system to trade, execute and manage complex Chinese domestic and international asset classes, portfolios and regulations. The system also offers direct Chinese exchange connectivity via a bi-directional real time interface to a widely-used domestic trading platform.

“Charles River has always grown its business organically,” said Cameron Field, Managing Director, Asia Pacific, Charles River Development. “We build local teams of Charles River experts who understand the local investment management market, language and culture. These teams support our clients from local offices. And we make a significant investment to localizing our solutions. For the past three years we’ve taken this approach in China.”

Continues Field, “We are pleased to be the first global investment management solutions provider in China, and are continually enhancing our local solution. Charles River is currently working on a number of strategic initiatives with key market bodies and closely monitoring how the adoption of NGTS and the STEP Protocol will enhance connectivity, data integration and STP for Chinese clients.”

一家向投资公司提供前台和中台软件及方案的供应商), 今天宣布在中国北京建立办事处以扩展其全球运营。北京办事处设于金融街的卓著中心,配备富有经验的Charles River员工及通晓多国语言的大陆员工,以向大陆投资管理公司提供专业的项目实施,咨询及支援服务。Charles River在中国的客户包括中国最大的机构投资者 – 中国人寿资产管理公司。

“投资于国际资产使得中国的资产管理公司对前台和中台系统的需求增加,而这些系统必须支持复杂的投资策略其中包括中国国内资产,产品及工作流程。” Charles River Development全球董事总经理Tom Driscoll说。“Charles River Investment Management System (Charles River IMS)可以支持我们的中国客户可能需要的任何条规,资产类别,交易及语言方面的需求。“

Charles River IMS具有全面的中文功能,并支持35种以上的国内证券类型及相关的工作流程。客户可使用Charles River IMS进行交易,执行以及管理复杂的国内及国际资产类别,组合及条规。系统也通过与一家国内普遍使用的交易平台的双向实时接口提供对国内交易所的直接连接。

“Charles River一直以来都是在有计划地拓展自己的业务,“Charles River Development亚太地区董事总经理Cameron Field说。“我们建立了解当地投资管理市场,语言及文化的富有经验的本地团队。这些团队从当地办事处支援我们的客户。而且我们投入可观的投资以使我们的方案本地化。在过去的三年里我们在中国一直是这样做的。“

他接着说,”我们非常高兴我们成为首家进入中国的全球投资管理方案提供厂商,并会继续增强我们的本地化方案 。Charles River目前正与主要市场机构联系并正在进行一些战略措施,我们也在关注新一代交易系统以及STEP的采用将会如何使中国客户的连接性,数据集成以及直通式处理的功能增强。

Source: Charles River, 13.10.2009

Filed under: Asia, China, Data Management, News, Risk Management, Trading Technology, , , , , , , , , , , , , ,

SAFE sets new rules for QFII and QDII portfolio investors in China

BEIJING, Oct 11 (Reuters) – China has formally relaxed rules on inbound portfolio investment, raising the maximum sum a single institution may invest to $1 billion from $800 million, the State Administration of Foreign Exchange (SAFE) said.

The new rules governing China’s Qualified Foreign Institutional Investor (QFII) programme also shorten the lock-up period for insurers and pension funds to three months from the one-year requirement that other investors must follow.

The changes, which came into effect on Sept. 29, are broadly in line with draft proposals released in early September.

According to a statement on SAFE’s website, the currency regulator had granted investment quotas totalling $15.72 billion to 78 investors by the end of September. UBS was the only investor to have used its full $800 million quota.

Separately, SAFE said actual capital inflows under the QFII programme had reached $14.50 billion at the end of August compared with a cumulative approved quota at the time of $15.32 billion.

Source: Reuters, 11.10.2009

SHANGHAI (Dow Jones)–China is raising the maximum limit a single qualified foreign institutional investor, or QFII, can invest in the domestic stock market to US$1 billion from US$800 million, the country’s foreign exchange regulator said over the weekend in rules that take effect immediately.

The relaxation of the rules under the program that allows designated foreign investors to trade yuan-denominated A-shares had been expected, but its timing comes as China’s stock markets are set to reopen for a full week of trading on Monday after being shut since Oct. 1 for a holiday break.

The State Administration of Foreign Exchange (SAFE) said that it may adjust the QFII quota ceiling as needed in the future and that reviews under the QFII program, first launched in 2003, will be more balanced going forward.

However, the revised rules also continue to underscore the strong oversight Beijing is keeping on cross-border capital flows, highlighting China’s very cautious approach toward opening up its domestic stock markets and liberalizing the capital account of the world’s third largest economy.

In statements posted on its Web site late Saturday, SAFE said that the lock-up period of funds for some institutional investors under the QFII program will be shortened to three months, though for other funds the one-year lock-up time remains enforce.

The shorter lock-up period that applies to pension funds, insurance funds, charity funds and government funds, among others, is aimed to encourage medium- and long-term investing, SAFE said.

The revised rules, which were first circulated as a draft proposal for public comment in early September, took effect Sept. 29, according to the SAFE statements. The maximum quota for a single QFII is being raised to US$1 billion, from US$800 million and the minimum quota application each time must be at least US$50 million, the revised rules state.

“SAFE can adjust the ceiling based on economic and financial trends, the supply and demand in the forex market, and the balance of payment situation,” the rules state.

China has given preference to review and approval of pension funds, insurance funds, mutual funds, charity funds and government funds under the QFII program, SAFE said.

China’s QFII program allows qualified foreign institutional investors to invest in securities traded on the country’s domestic stock markets, namely A-shares in Shanghai and Shenzhen, which this year have been one of the world’s outperforming stock markets.

As of the end of September, a total of 78 foreign institutions obtained the QFII quota totaling $15.72 billion, SAFE data showed.

The approval for QFII status comes from China’s securities regulator, but it is SAFE that has authority over granting quotas. This year SAFE has granted 12 QFIIs quotas with the most recent being Bank Negara Malaysia, the Malaysian central bank, and Deutsche Bank Group’s DWS Investments. Both were each approved US$200 million in QFII quotas in September, SAFE data showed.

Once approval for a quota is given, the QFII has to wait a year before applying for a new quota; and the QFII has to remit the approved funds within six months from getting approval, the rules state.

The revised rules on QFII programs also allow a single QFII to open different types of investment accounts and allows more convenience in foreign exchange, redemption and other area.  The administration said it may reduce a QFII’s investment quota if it fails to effectively use the quota within two years of approval. SAFE also strictly forbids QFII to transfer or sell investment quotas to others.

In a move to increase transparency in the QFII program and the Qualified Domestic Institutional Investors program, which allows domestic investors to invest in overseas securities, SAFE said it will regularly disclose the status of its approval process.  As of the end of September, SAFE also approved 56 QDIIs so far with a total of $55.95 billion investment quota, SAFE data showed.

Source: DownJones, 11.10.2009

Filed under: China, Exchanges, News, , , , , , ,