The plan to link the British and Chinese stock markets should go ahead, according to UK Chancellor Philip Hammond, who set out in the 8th annual UK-China Economic and Financial Dialogue (EFD) how work on the London-Shanghai Stock Connect will move forward.
The new announcement has dismissed concern that the Brexit will make listings on the London exchange less attractive to Chinese investors. Still, there were some other obstacles that delayed a final agreement including limited support from Chinese regulators, the time zone difference, settling trades and the use of renminbi as the sole settlement currency.
Per the statement, officials on both sides are expected to take part in preparing implementation arrangements, which will look at a similar link set up a year ago between the Shanghai and Hong Kong stock exchanges.
The feasibility study will focus on eight key areas: capital markets, asset management, insurance and pensions, banking, freen finance, fintech, China’s Belt and Road Initiative, and financial inclusion.
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UK-China ‘FinTech Bridge’
In addition, Hammond and Chinese Vice Premier Ma Kai revealed a series of new measures which are intended to strengthen financial ties between the two countries. One of these measures involves the creation of a UK-China fintech bridge, which should strengthen regulatory co-operation and boost reciprocal market access for both UK and Chinese fintechs.
Announced as part of the partnership, China has committed to a series of new measures to grant qualified British banks a licence to act as lead underwriters of panda bonds issued in China. China also agreed to gradually raise the limit to foreign ownership of UK and foreign companies to allow greater freedom to UK firms wishing to operate in China.
Furthermore, a number of Chinese firms and financial institutions are set to open new offices in London, including China Life, China’s largest life insurer.
Commenting on the new financial partnerships, the Chancellor of the Exchequer Philip Hammond said: “Britain is open for business and we are strengthening our economic and financial ties with China, one of the world’s fastest growing economies. London-Shanghai Stock Connect is the first of its kind and it will further strengthen the financial ties between China and Britain, home to the world’s leading financial centre.”
Andrew Bailey, Chief Executive of the FCA, added: “We are delighted to be signing a Co-operation Agreement with the People’s Bank of China, which will underpin a UK-China FinTech Bridge. The Co-operation Agreement will allow us to share information about financial services innovations in our respective markets, including emerging trends and regulatory issues. We hope that by strengthening links between the regulators, barriers to entry will be reduced and innovation encouraged in both countries’ financial services sectors.”