FTSE Russell responded exclusively to "expand the China A50 Index": no decision has been made yet

The Paper's reporter Sun Mingwei

On November 3, in response to market news that FTSE Russell is considering expanding the scope of its FTSE China A50 index, FTSE Russell exclusively responded to the surging news reporter that it is conducting multi-faceted consultation, but has not yet made any decision.

Ftse Russell is considering a major adjustment to the FTSE China A50 index after the launch of the MSCI China A50 Connectivity Index futures on the Hong Kong Stock Exchange, including the possibility of doubling its range to 100 to support its FTSE China A50 futures listed on the Singapore Exchange, the Financial Times reported on November 1.

FTSE Russell CEO Arne Staal said the company may adjust its FTSE China A50 index in response to investor feedback. Staal said consultations with investors have recently concluded and changes under consideration include expanding the index's range, possibly to 100 companies.

Investors were also asked if they were satisfied with the index's market-capitalization-based approach to stock weighting, and what channels they would prefer to use to invest in companies listed in Shanghai and Shenzhen.

"The market is changing, the economy is changing, and the index needs to be updated to reflect the transparency of the investment opportunities that investors are currently looking for," Staal said. He added that he wanted the index to remain "as relevant as possible."

"To ensure that the FTSE China a index series, including the China A50 Index, remains as relevant as possible, FTSE Russell is consulting with index users and other stakeholders on a number of issues. This includes index market performance, index weighting methodology and accessibility of index components. FTSE Russell told the surging news reporter that no decision was made in this consultation, but it is worth noting that any enhancement to the index series will not automatically lead to changes in existing financial products.

FTSE China a50 index futures are a key tool for international investors seeking to hedge exposure to Chinese equities. According to FTSE Russell and singapore exchange, trading volume of FTSE China a50 index futures rose 20% year-on-year to 9.3 million contracts.

However, with the launch of the Hong Kong Stock Exchange's first A-share futures variety, msci China A50 Interconnection Index Futures, this near-monopoly position may be broken.

It is worth mentioning that MSCI and HKEX also signed a licensing agreement in 2020 to launch 37 futures and options contracts in Hong Kong that track multiple MSCI Asian and Emerging Markets Indexes respectively, after SGX held the agreement for more than 20 years.

STAAL said the composition of the MSCI China A50 Pass index on which HKEX-traded futures contracts are based provides "a very different exposure to ours."

SGX chief executive Boon-Chye Loh added that FTSE China a50 futures are an "ultra-liquid" contract that will remain critical for international investors as the Chinese market continues to open up.

Even so, SGX's derivatives business has taken a hit over the past year. In the 12 months to the end of June, derivatives revenue from the company's equity business fell 20 percent to S$288.4 million ($213 million).

Since the results were announced in August, SGX shares have fallen nearly 20 percent and profits have fallen 7 percent. SGX shares are up 7% this year, while shares on the Hong Kong Stock Exchange are up 12% over the same period.

Editor-in-Charge: It's Winter