Hong Kong Exchanges and Clearing (HKEx) and Shanghai Stock Exchange (SSE) have announced a Closer Cooperation Agreement, which should mean the launch of the first genuine A-share Exchange Traded Fund (ETF) product by H2.

The Agreement commits the two exchanges to work together more closely towards the: "common goals of meeting the domestic and international fund-raising needs of Chinese enterprises for their continued development, and contributing to the greater development of China's economy".

Ronald Arculli, chairman of HKEx said it hoped to contribute to the common goals by sharing its experience in implementing international standards and best practices, and what it has learned from its exposure to global investors and issuers: "We also see room for closer cooperation in product expansion not only on our markets but also on the Shanghai Stock Exchange and other Mainland exchanges - such as a wider range of securities, including ETFs, Callable Bull/Bear Contracts (CBBCs) and derivative warrants (DWs), as well as derivatives like futures and options based on A shares."

He said, in the long term, the closer cooperation would help eliminate potential regulatory and operational arbitrage by aligning rules and regulations as well as the operations of markets and exchanges in the Mainland and Hong Kong: "We also look forward to the opportunity to learn more from the Shanghai Stock Exchange about the needs of Mainland investors, and providing enhanced support to the QDII (Qualified Domestic Institutional Investor) scheme."