ASX and China Futures Association Agree to Five-Year MOU

The ASX and China Futures Association have signed a memorandum of understanding, expanding a new cross-border informational exchange.

The Australian Securities Exchange (ASX) has entered into a Memorandum of Understanding (MOU) with the China Futures Association (CFA), according to an ASX statement.

More specifically, the ASX and CFA have signed a MOU at a recent conference in Hangzhou, China. The CFA is a Chinese industry self-regulatory entity, which deals with the development of the futures industry and the coalescence of training and transparent industry standards.

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The MOU between both the ASX and CFA caters to interests in the futures markets in Australia and China. This includes a cross training and agglomeration of staff and information exchange to foster an understanding of how the markets and futures products operate and function in each realm, conditional upon a term of five years, per the lifespan of the MOU.

It should be noted that derivatives and OTC markets are amongst the ASX’s largest business, constituting approximately 32% of ASX Group revenues in the 2014 financial year, via a recent ASX report. Moreover, the notional turnover in the Australian dollar (AUD) interest rate futures market was calculated at $42 trillion in 20144, ranking it the largest in Asia and among the top five worldwide.

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This is the second such endeavor between the ASX and a Chinese entity, following the Heads of Agreement signed earlier this year between the ASX and the Bank of China. That agreement sought to expand the strategic cooperation between the parties to develop the Renminbi (RMB) as a currency in Australia’s financial markets.

According to Peter Hiom, ASX Deputy CEO in a recent statement on the MOU, “The MOU enables ASX to develop a better understanding of China’s futures markets at a time when these markets are evolving rapidly, and the trade and investment flows between Australia and China are growing.”

“ASX operates some of the most liquid and mature interest rate and equity derivatives markets in the Asia-Pacific region. We look forward to learning more about the strong development of the equity and commodity futures markets in China,” he added.

“With the joint efforts of both parties, we truly believe that this collaboration will further promote the development of the China futures industry. We look forward to working with ASX in the years ahead,” noted Liu Zhichao, Chairman of CFA in an accompanying statement.

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