Hong Kong And London Stock Exchanges Form Alliance

by Mary Swire, Tax-News.com, Hong Kong

27 May 2002

Hong Kong Exchanges and Clearing (HKeX) and the London Stock Exchange (LSE) announced an alliance last week under which they plan to offer trading in each other's most liquid stocks, and will simplify listing procedures to encourage dual listing. Trading will take place during local trading hours, and trades will be settled in domestic currencies, so Hong Kong investors would trade London stocks in Hong Kong dollars, while London investors would trade Hong Kong stocks in British pounds.

HKEx had been thought more likely to form a tie-up with the New York Stock Exchange, but said that the similarity in regulatory structures between London and Hong Kong had made it easier to partner with the LSE. HKEx said it would continue talks with the New York exchange and other markets about a global alliance, but denied that it intended to go forward to a merger or share swap with the LSE.

The LSE has been struggling to form global alliances since a series of attempted deals with other European exchanges fell apart last year, leading to changes in senior management. The deal with Hong Kong can be seen as an attempt by the LSE to prove that it is still a viable global player.

Clara Furse, LSE chief executive, said: "Both exchanges have a global outlook and strong liquid markets . . . So it is natural for us to explore ways to extend our reach across time zones."

Kwong Ki-chi, chief executive of HKEx, said: "This collaboration will be beneficial to both exchanges, our market participants and shareholders . . . Ultimately, these proposals will contribute to the long-term business growth of both marketplaces."

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