HKEX to offer MSCI derivatives, replacing Singapore as index provider’s Asia derivatives hub
- MSCI said it views Hong Kong as a major international financial centre for “years and decades to come”
- Move to Hong Kong is a bet on future access to a larger base of Chinese investors
Hong Kong Exchanges and Clearing (HKEX) said on Wednesday it would begin offering 37 futures and options contracts tied to a series of MSCI’s Asia and emerging markets-focused indices, a vote of confidence for the city amid rising concerns about Hong Kong’s future as an international financial hub.
The move helps further cement the HKEX’s position as an Asian hub for trade in derivatives. It comes two years after the bourse received regulatory approval to begin offering futures on the MSCI Asia ex-Japan Index and just over a year after it reached a licensing agreement on futures tied to the MSCI China A Index.
It also is a blow to the Singapore Exchange (SGX), which will no longer host more than two dozen futures products beginning in February after a 23-year relationship with MSCI. The SGX said its profit for fiscal year 2021 could fall by 10 per cent to 15 per cent as a result, sending its shares down more than 12 per cent on Wednesday.
The agreement was announced on the same day that Hong Kong’s Legislative Council is debating a controversial national anthem bill and a day before the National People’s Congress (NPC) in Beijing is due to adopt a national security law for Hong Kong. Both moves by the mainland have sparked international criticism and reignited anti-government street protests in the city.
“In running any financial market for any international financial centre, the rule of law is very important, the clarity of law is very important,” HKEX chief executive Charles Li said at a press conference on Wednesday.
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The agreement also comes as Hong Kong’s economy has been hit hard, first by the protests and then by the coronavirus pandemic. The city’s economy is expected to contract by as much as 7 per cent this year.
