Speaking a meeting in Hong Kong which forged an agreement for closer cooperation between the Shanghai Stock Exchange (SSE) and Hong Kong Exchanges and Clearing (HKEx), the SSE suggested it will launch China's first ETF tracking foreign stocks this year.

The first ETF is likely to track the H shares of Chinese companies listed in Hong Kong, but the exact timing and size of the launch will depend on market conditions. In a joint statement the two groups said at present several Mainland fund management companies were actively making preparations for the issue of ETFs related to Hong Kong stocks. They said it was hoped that future cooperation on ETFs would be extended on a gradual basis to the development of ETFs on bonds and gold, as well as cross listings.

The two organisations also said that besides ETFs they may seek further cooperation in products such as securitised assets, warrants, Callable Bull/Bear Contracts and options.

It was confirmed the SSE's Company Management Department and HKEx's Listing Division will set up a mechanism for regular exchanges, in order to more effectively regulate enterprises and securities listed in both markets and better protect shareholder interests.

By 'regular exchange' they confirmed an exchange of views will be held every two months, focusing on the operational issues in the regulation of securities listed in both markets and related information disclosure issues. The two organisations will take turns organising the meeting, and the same mechanism may be extended to other departments, if it is agreed it proves effective.

The Tokyo Commodity Exchange (TOCOM) has announced two ETFs which invest directly in its gold futures contract and its platinum futures contract respectively, have been approved for listing on the Osaka Securities Exchange on 15 February. These are the first Japanese ETFs which invest directly in the Japanese commodity futures market.

The ETF investing in the gold futures contract is being set up and managed by Mizuho Asset Management and tracks the settlement price of gold futures in the back contract month (however, for the rollover, the new back contract month will only be tracked on and after the first business day of the month following the day on which it was generated). The platinum futures ETF contract is being set up and managed by Nomura Asset Management, and tracks the performance of the Nikkei-TOCOM Platinum Index.

Tadashi Ezaki, president and chief executive of TOCOM commented: "We expect that the launch of this type of ETF will benefit the commodity market of Japan through an increase in trading activity, and that it will also be well received by pension funds and other Japanese institutional investors, which have so far invested their funds mainly in securities, as a new effective way of starting to invest in commodities.
"We also hope it would contribute to our goal of strengthening the linkage between financial markets and our market. We believe that this development will increase the competitiveness of the Japanese exchanges, and furthermore, enhance the competitive edge of the financial and capital markets of Japan."