Japan and Shanghai establish ‘ETF Connectivity’

Japan Exchange Group and Shanghai Stock Exchange is underway establishing a “Japan-China ETF Connectivity” which will link the ETF markets for both exchanges. The scheme is aimed at improving the opportunities for cross-border investment between Chinese and Japanese markets.

China initiated a similar scheme with Hong Kong a few years ago but has suffered several delays and is even under consideration to be ditched due to unresolved technical issues.

The ETF Connectivity between Japan and China will enable ETF providers from either country to develop a feeder ETF that will invest in the counterparty’s ETFs. The exchanges hope the collaboration will encourage greater adoption of the Japanese and Chinese securities markets by broadening their audiences.

Akira Kiyota, Japan Exchange Group CEO, said in a statement: “This scheme is the result of our negotiations with Shanghai Stock Exchange and the Chinese and Japanese authorities as well as market participants.

“We will continue to collaborate with SSE on this scheme and other ways to increase cross-border investment flows between China and Japan as we contribute to the continued development of the capital markets of both our countries.”

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