LSE opens direct membership to Hong Kong
The London Stock Exchange has gained approval for Hong Kong companies to become members. Previously, only companies from the European Economic Area and Israel could join.
Membership allows trading firms to connect to the LSE’s order book and trade cleared securities as well as derivatives and depositary receipts. The move is part of a drive by the LSE to bring closer contact between London and China, as the City seeks to become an international RMB centre.
Previously, Hong Kong firms would have needed to go through a UK intermediary. Now that the LSE has obtained the approval of Hong Kong’s Securities and Futures Commission, Hong Kong companies will be able to trade from Hong Kong, using an internet connection to London. Alternatively, they can co-locate in London. But in either case, they will have direct access without the need for any UK intermediary.
“This is a significant development in further deepening the ties between London, Hong Kong and China,” said Alexander Justham, chief executive at the LSE. “As members of London Stock Exchange, Hong Kong firms will be able to offer their customers access to the most liquid European market. Like Hong Kong, London has always been a market open to the world and we are excited about the increasingly strong relationship being forged between these two exceptional global financial centres.”
Hong Kong’s securities market has seen several important developments in recent months. In November, a landmark deal between China’s Hong Kong and Shanghai stock exchanges opened up unrestricted access to the China A-shares market to foreign investors for the first time. Meanwhile, since the start of last year, seven Chinese companies have been admitted to the LSE, 10 new RMB bonds have been issued in London and six new RQFII ETFs have listed on the market, including the first ETF in Europe denominated in RMB.