The first Renminbi Qualified Foreign Institutional Investor (RQFII) ETF in Europe has been listed on the London Stock Exchange, with HSBC as the fund’s custodian.
The CSOP Source FTSE China A50 UCITS ETF is the first ETF to be listed on the U.K. stock market using investment quota approved under the RQFII pilot scheme, a program launched in 2011 to open up investment in renminbi-denominated Chinese securities to overseas investors. An RQFII vehicle will offer both retail and institutional investors direct exposure to the China A Shares market in Europe, through an ETF.
Hong Kong-based CSOP is responsible for investment management and European exchange traded product provider Source acts as the fund promoter and manager through its Irish subsidiary.
The ETF tracks the FTSE A50 index under the UCITS structure (Undertakings for Collective Investments in Transferable Securities). The index comprises the largest 50 A Share companies by full market capitalization listed on the Shanghai and Shenzhen Stock Exchanges. This UCITS ETF is regulated under the Central Bank of Ireland, where it is domiciled. It is denominated in RMB and trades on the LSE in USD and GBP.
HSBC is providing a full range of securities services to the ETF, including trusteeship, global custody, fund accounting and transfer agency as well as acting as RQFII custodian, having assisted CSOP Asset Management Limited (CSOP) in obtaining the approval for RQFII quota of RMB1.5 billion from China’s State Administration of Foreign Exchange (SAFE) in November 2013. CSOP is currently the largest RQFII manager of A Shares globally and has been granted quota specifically for the CSOP Source FTSE China A50 UCITS ETF.
Cian Burke, global co-head HSBC Securities Services, said: “HSBC is delighted to be the custodian that supported the first RQFII ETF to be listed in Europe. The listing of this ETF reflects China’s rapid progress in opening up its capital market to global investors.”
Among the largest constituents of the FTSE A50 index are Ping An Insurance, China Vanke and Gree Electric Appliances. FTSE is a leading provider of China-focused indices with ETFs tracking the FTSE China Index Series accounting for over $18 billion AUM, as at Dec. 31. 2013.
Xavier Rolet, chief executive of London Stock Exchange Group said: “We are delighted to mark the first ETF listing of 2014 with such a ground breaking product. London Stock Exchange’s leading position as a listing venue for exchange traded products combined with FTSE’s strong track record of providing China-linked indices, positions the Group well to work with some of the largest asset management firms and ETF issuers in the world. The listing of a new China A Shares ETF will allow European investors to have direct exposure to one of the fastest growing economies and reinforces London’s position as a centre for international finance.”
Ted Hood, CEO of Source said: “Our new ETF represents a milestone for many investors, allowing them to directly
access one of the world’s most important equity markets for the first time. We have seen growing demand from investors looking to increase their exposure in China and our new fund will enable this through a transparent product, publicly available to trade on London Stock Exchange.”
Chen Ding, CEO of CSOP said: “We are delighted to be partnering with Source to create a European ETF, the first that CSOP has listed on London Stock Exchange. CSOP manages RQFII allocations globally with products linked to leading benchmark indices, such as FTSE.”
HSBC to Provide Custody For First RQFII ETF to Be Listed in Europe
The first Renminbi Qualified Foreign Institutional Investor (RQFII) ETF in Europe has been listed on the London Stock Exchange, with HSBC as the fund’s custodian.