Euronext Engages in ETP Partnership with Shenzhen Stock Exchange

Euronext and Shenzhen Stock Exchange have signed a MOU, targeting exchange traded products and a revamped product suite.

Europe’s largest exchange, Euronext, and the Shenzhen Stock Exchange (SZSE) have signed a Memorandum of Understanding (MOU) to augment the development of Exchange Traded Products (ETPs) in both the Republic of China and Euronext’s markets, according to a Euronext statement.

The newest partnership between the two entities and subsequent MOU is the first point of collaboration between Euronext and SZSE, which aim to target, develop, and co-brand a new suite of indices and ETPs, including Exchange Traded Funds (ETFs).

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One of the main challenges in partnership of this latitude is making sure the cross listings of ETPs are permitted by the requisite regulation in each respective jurisdiction. Moreover, the two exchanges team up on index-related subjects, research papers, as well as a comprehensive index composite based on global or local markets.

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Amongst the many initiatives slated for exploration, Euronext and SZSE are contemplating dual listings, fixed income markets, and off-shore RMB products.

According to Lee Hodgkinson, Head of Markets and Global Sales at Euronext, in a recent statement on the partnership, “Our partnership for the joint development of Exchange Traded Products and Indices in China and Europe is an exciting development. The Chinese financial markets are undergoing a remarkable transformation and we are privileged to be in a position to jointly develop innovative new products and create opportunities for trading and investment across both regions.”

“The Chinese capital market is undergoing profound changes and reform. Besides improving basic equity products, the SZSE is also enriching the product line and building a more open market to provide more liquidity and risk management tools for domestic and foreign investors. The cooperation with Euronext will further facilitate cross-border investment and financing activities,” added Liyang Jin, Executive Vice President of SZSE, in an accompanying statement.
Earlier this month, Euronext made headlines after reporting its financial results for Q1 2015. During Q1 2015, third party revenue at Euronext increased to $146 million (€130 million) from $133 million (€118.7) in Q1 2014, or by 9.6% YoY.

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