BOCI-Prudential to cross-list Hong Kong ETF in Taiwan

Jul 29, 2009

Retail investors will gain access to China's stock markets for the first time through the exchange-traded fund.

BOCI-Prudential Asset Management is planning to cross-list its W.I.S.E.-CSI 300 China Tracker exchange-traded fund (ETF) on the Taiwan Stock Exchange through a feeder fund structure. That ETF, which tracks the performance of the top and most liquid 300 stocks on the Shanghai and Shenzhen markets, was launched in Hong Kong in July 2007.

W.I.S.E.-CSI 300, being a sub-fund of BOCI-Prudential's W.I.S.E. ETF series, is the first Hong Kong ETF approved by the Taiwan Financial Supervisory Commission for cross-listing in Taiwan.

The feeder fund will be listed in Taiwan by Polaris International Securities Investment Trust and will be called the W.I.S.E. Polaris CSI 300 Securities Investment Trust Fund. The three-day public offering of the fund started yesterday. The actual listing date has yet to be determined, but is expected in August.

W.I.S.E. Polaris CSI 300 is a feeder fund which invests mainly in W.I.S.E.-CSI 300 China Tracker, which tracks the broad-based CSI 300 Index compiled by China Securities Index Company in mainland China. The CSI 300 Index measures the financial performance of companies across all major industries in mainland China and is a common benchmark used by major investors at home and abroad.

Tang Hing Sing, investment director for quants at BOCI-Prudential, says the cross-listing is "as much a landmark development in Hong Kong's ETF history as it is a key milestone of our company". BOCI-Prudential is a joint venture between BOC International Holdings and Prudential Corporation.

"We believe that our product serves to meet the investment and diversification needs of Taiwan investors," Tang says. "The cross-listing has also reaffirmed BOCI-Prudential's reputation as a pioneer in the regional ETF market, and in bringing innovative products to the market."

In a previous interview with AsianInvestor, Tang said the move towards the integration of markets in China, Hong Kong and Taiwan was "irrevocable".

The cross-listing was made possible by the signing in May of a side letter containing additional details to a bilateral memorandum of understanding (MOU) between Hong Kong's Securities and Futures Commission (SFC) and the Taiwan Financial Supervisory Commission (FSC).

Under the terms of the side letter to the MOU, ETFs listed on the Hong Kong or Taiwan stock exchanges and managed by asset managers licensed respectively by the SFC or the FSC will be mutually recognised in each other's jurisdiction for the purpose of cross listings and offerings.

That MOU was entered into by the two financial regulators as far back as 1996. So far under the terms of the side letter, 16 ETFs listed in Hong Kong and 11 ETFs listed in Taiwan are qualified to cross-list in the other jurisdiction. The side letter is also expected to strengthen regulatory cooperation between the SFC and the FSC, in particular arrangements relating to information sharing and confidentiality regarding management of ETFs.