Asian exchanges eye Hong Kong-Shanghai trading link

By Gregor Stuart Hunter & Kosaku Narioka & Kwanwoo Jun

Officials in the city have sought to play down fears that the Stock Connect scheme will sideline the city and leave Shanghai, which is developing its own financial free zone, as the main beneficiary. "I am confident that the scheme will raise Hong Kong's capital market and offshore renminbi business to new heights, thus rebutting the notion that Shanghai and Hong Kong are in a fight that only the winner can survive," wrote Norman Chan, chief executive of the Hong Kong Monetary Authority, in a blog last week. "And, more importantly, the scheme is a practical demonstration of close collaboration between Hong Kong and Shanghai, which in turn will contribute in no small way to China's reform and liberalization.

The exchange's direct link to Hong Kong will result in faster and cheaper transactions, which should allow it to benefit if the Hong Kong-Shanghai trading link proves successful, said Chew Sutat, head of sales and clients at Singapore Exchange Ltd. "The devil is still in the details and there are a lot of rules and restrictions," he said. "We're not sure what kind of animal it is.

Singapore, Hong Kong's longtime financial rival, has attempted to hitch a ride on the city's new connection by opening an office with a direct link to Hong Kong Exchanges & Clearing Ltd. 's new data center, purpose-built for high-frequency derivatives trading.

Read more here: Business Spectator


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