Derivs - Clearing and Exchanges

The Securities and Exchange Commission of Pakistan (SECP) has approved legislation that will pave the way for the creation of clearing houses, in another boost for its capital markets.

In this round-up, China is open to free trade agreement talks with the UK, China Foreign Exchange Trade System sees its RMB index recover, and China Taiping Insurance Group is set to venture into the domestic mutual fund market. Plus, a recap of GlobalRMB’s top stories this week.

Clearstream is looking to better connect global investors to China’s interbank bond market (CIBM) with a link set to launch in October. The firm is also working on a joint venture (JV) with the China Foreign Exchange Trading System (CFETS) to launch a bond exchange in Europe, GlobalRMB has learned.

It has been mooted for months but the Shenzhen-Hong Kong Stock Connect remains elusive with little detail on when the scheme will launch. But instead of being too overly fixated on timing, market participants said the focus should instead be on the scheme’s potential impact and the further liberalisation of China’s securities market.

The London Stock Exchange (LSE) could be closing in on an equity trading link for UK-listed depositary receipts by Chinese firms that would see the participation of Euroclear and LCH.Clearnet, GlobalRMB has learned.

The market reaction to the UK’s surprise decision to leave the European Union has been immediate with stocks falling, the pound weakening and the country downgraded by international rating agencies. But market participants are worried that the worse has yet to come and London could be set to lose its shine as a premium renminbi hub.

Clearstream has confirmed that it is working with the Chinese authorities to establish a link between offshore investors and the China interbank bond market (CIBM). The firm also said it will boost its Stock Connect capabilities from July 4.

The Taiwan Futures Exchange (Taifex) is set to launch the first exchange-traded options on RMB rates this month, the exchange told GlobalRMB. Taifex is also seeking regulatory approval to launch more A-shares index futures.

The China Foreign Exchange Trade System (CFETS), managed by the People’s Bank of China (PBoC), signed a $65m agreement with FX and fixed income trading platform provider ICAP to develop the next generation of its core trading systems.

Financial market regulators finally have something to cheer about, after a host of recent setbacks, as Europe and the US this week took a big step towards aligning their treatment of central counterparties (CCPs). But the move could also heighten competition for clearing banks in Europe.

Europe and the US have taken a big step towards cohesion on their treatment of central clearing counterparties (CCPs), with the European Commission and the Commodity Futures Trading Commission unveiling a common approach towards equivalence between the two CCP regimes.

The chief executive of Hong Kong’s Securities and Future’s Commission (SFC), Ashley Alder has given a robust defence of the regulator's co-operation with its Chinese peers saying that Stock Connect would have been impossible without it. Hong Kong will also remain the key gateway between the Mainland and global financial markets, he argued.