TSE – Japan, Shanghai Bourses Agree to Expand ETF Connectivity Scheme

The exchanges agreed to broaden the lineup of products available under the scheme and to collaborate in other areas including sustainable finance. 

JPX (Japan Exchange Group) and the SSE (Shanghai Stock Exchange) have signed an MoU agreeing to further develop ETF connectivity between the two markets.

The Japan-China ETF Connectivity scheme was launched in June 2019, allowing asset managers in either country to set up cross-border feeder funds that invest in the other market’s ETFs through China’s QDII and QFII programmes.

Four funds were launched on the SSE, tracking the Nikkei 225 and Topix Stock Price Index, while another four funds were launched on the TSE (Tokyo Stock Exchange), a JPX subsidiary, tracking the SSE180 and CSI500.

Since the launch, JPX and SSE have collaborated on activities to encourage the use of the ETFs and facilitate investors’ understanding of each other’s securities markets.

“The first batch of products have been running smoothly and the returns have been good,” the SSE said in a statement, adding that the initiative demonstrated the “huge potential” for the two countries to expand market access and cooperation.

The new MoU extends the collaboration, signifying a pledge by both exchanges to further develop the Japan-China ETF Connectivity scheme by broadening the lineup of products available under the scheme.

The exchange will also explore collaboration in areas of science and technology, the REITs market, and sustainable finance.

“Moving forward, we will continue to invigorate the Japan-China ETF Connectivity scheme and cross-border trading between our two countries as we work with our counterparts in Shanghai to further develop the capital markets of both countries,” said JPX Group CEO Kiyota Akira in a statement.

The MoU was signed during the second China-Japan Capital Market Forum, which was held online on Monday (25 January).