HKEX strategic plan to bolster price discovery beyond EQD

Hong Kong Exchanges and Clearing Limited (HKEX) has rolled out its Strategic Plan 2016-2018, outlining the development roadmap for HKEX and Hong Kong's financial markets.

HKEX's strategic goals for the three-year period are to extend and deepen its value proposition as China and the world markets accelerate their mutual integration leveraging its position as the most "effective platform" for cross-border market access; and a unique destination market in Hong Kong for products with both Chinese and international relevance.

The plan includes HKEX's business strategy for its three asset classes: equity, commodities and fixed income and currency (FIC), and also covers the company's goals in client relationship management and platform enhancement as well as market microstructure and regulation.

In the equities segment, the exchange plans to grow and strengthen its core franchise as a 'compelling listing and fundraising venue'; extend Shanghai-Hong Kong Stock Connect, launch Shenzhen-Hong Kong Stock Connect and launch "Primary Equity Connect"; as well as launching new derivatives products on Mainland, Hong Kong and international underlying assets.

In the commodities segment, HKEX will expand its suite of products both on the London Metal Exchange (LME) and in Hong Kong into adjacent commodities; and develop a spot commodities trading platform in the Mainland market in order to service the real economy, with a view to producing and internationalising 'Chinese benchmarks' as well as 'physicalising' the Mainland commodities market using the LME model; as well as to pursue cross-border connectivity with Mainland commodities exchanges and products.

In relation to FIC, the Hong Kong exchange plans to launch new exchange-traded derivatives in Hong Kong on RMB and onshore interest rates; offer a broader product suite in OTC Clear, delivering tangible benefits to market users; and explore mutual market access with the Mainland in the institutional cash bond market through a "Bond Connect" scheme.

'We aim to build new price discovery capabilities, benchmarks and risk management tools in fixed income, currency and commodities to complement our well-established equity and equity derivatives business,' said HKEX chairman C K Chow (pictured), in a statement.

HKEX strategy of developing multi-asset class capabilities is aimed at achieving transformational growth arising from the Mainland's inevitable integration with the world markets, the accelerating internationalisation of Mainland investors' portfolios and the challenges faced by Chinese and international commodity markets, said Chow.

HKEX is aiming to reach its new strategic goals over three years, though it expects accomplishment of some may take longer because it has an ambitious plan and development of financial markets is subject to many factors which are beyond HKEX's control, it said.

Click in the link to read HKEX's Strategic Plan 2016-2018.