(Yicai Global) Jan. 21 --The Shanghai-Deutsche Stock Connect has come into focus recently following the success of the Shanghai-Hong Kong and Shanghai-London stock connects.
The second China-Germany High-Level Financial Dialogue that convened in Beijing on Jan. 18 reached a consensus on their cooperation on cross-border securities issues and regulation, building an offshore market for A-share index derivatives and the interconnection of their capital markets, a joint statement by the two announced.
Deutsche Boerse Group and the Shanghai Stock Exchange have conducted a feasibility study on depository receipt transactions by listed firms by each side, financial media China Securities Journal reported today.
Depositary receipts are negotiable securities issued by custodial banks in one country to represent equity in companies listed in another, which allow overseas investors to buy shares abroad.
The countries back their securities regulatory authorities in signing a bilateral memorandum of understanding for their cooperation to support derivatives of China's A-share index of domestic companies trade on the China Europe International Exchange in Frankfurt in Germany, per the statement.
China Europe International Exchange, a joint venture between the Shanghai Stock Exchange, Deutsche Boerse Group, and China Financial Futures Exchange, is the first dedicated trading venue for China-related investment products outside the mainland, according to the CEINEX website.
China welcomes qualified German-funded banks in the country applying for business licenses for China Depositary Receipts to further enhance the interconnection between the two countries' capital markets. The two sides also view favorably the Bank of China and the CEINEX signing of a memorandum of understanding on cooperation in D-shares -- Chinese shares traded on CEINEX -- to help Chinese firms go public in Germany.
The CEINEX, as an important platform for China-Germany financial cooperation, will introduce A-share index derivatives in the offshore market in Frankfurt, provide risk management tools for international investors, and support China in further opening its capital market, said Chen Han, CEINEX's co-chief executive.
Editor: Ben Armour