HKEx to integrate assets, promote clearing services

The Hong Kong Exchange and Clearing Limited (HKEx) announced its next three-year strategy Tuesday, vowing to integrate its asset classes while promoting businesses from products through trading to clearing.

Outlining the Strategic Plan 2013-2015, HKEx Chief executive Li Xiaojia told reporters that the group is obliged to integrate the four major classes of assets, namely cash equity, equity derivatives, fixed income and currency, and commodities.

According to Li, HKEx will seek to build upon the existing core asset classes of cash equity and derivatives, and expand into new asset classes by using commodities as a catalyst, leveraging Renminbi (RMB) internationalization, and seeking mutual access across the Hong Kong and Mainland market.

Within each asset class, HKEx will also aspire to offer services along the value chain, from products through trading to clearing, with emphasis on clearing, Li added.

Li said that over 70 percent of the group's revenue comes from the class of cash equity nowadays. In the future, HKEx will make commodities as a breakthrough, with the newly-purchased London Metal Exchange (LME) as the spearhead.

In this area, HKEx will expand the existing business by lowering barriers for Asian, particularly the Mainland, investors to access the LME market. Key initiatives include facilitating cross-border access, developing Asia time zone trading and clearing, offering RMB clearing services, and extending the LME's warehouse network into the Mainland.

As for the new fixed income and currency asset class, Li emphasized that the group will launch the on-exchange RMB futures as well as provide clearing services through the group's Over The Counter (OTC) derivatives clearing house.

Li attributed the previous success of HKEx to the opening up of China and the "One Country Two Systems" policy. Looking to the future, He said the broader reform in China and the accelerated capital account opening of China are big drives.

"The acceleration of RMB internationalization means we can have a new take-off," he added.