Japan Exchange Group, Inc. (JPX) and Shanghai Stock Exchange (SSE) will establish "Japan-China ETF Connectivity", a scheme for creating ETFs that link the ETF markets of both exchanges. Aimed at increasing opportunities for cross-border investment between the Chinese and Japanese securities markets, this scheme is the result of negotiations with the authorities and market participants based on the Memorandum of Understanding concluded between the two exchanges in October 2018. Please see the Appendix for an outline of the scheme.
Under this scheme, a Japanese or Chinese ETF provider will be able to develop a feeder ETF that mainly invests in the counterparty's ETF after additionally obtaining special investment quota* for this scheme from the State Administration of Foreign Exchange of China.
Henceforth, JPX and SSE will actively collaborate to encourage ETF creation and investment under this scheme and promote the Japanese and Chinese securities markets to investors.
Akira Kiyota, JPX Group CEO, said, "I am very pleased to see the establishment of Japan-China ETF Connectivity. This scheme is the result of our negotiations with SSE and the Chinese and Japanese authorities as well as market participants. We will continue to collaborate with SSE on this scheme and other ways to increase cross-border investment flows between China and Japan as we contribute to the continued development of the capital markets of both our countries."
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