In a landmark move, two call warrants issued by Macquarie and JP Morgan are set to start trading on Hong Kong’s stock exchange today covering a physically backed RQFII exchange-traded fund.

Both securities cover the China AMC CSI300 Index ETF. Not only is it the first time an RQFII ETF is being used with an equity derivative, it is also the first warrant to be issued on a physically backed A-share ETF (until now all warrants on A-share ETFs have used synthetic underlyings).

The two warrants will be quoted, traded and settled in Hong Kong dollars, via the HKD counter of China AMC's RQFII ETF.

But seeing as this ETF is denominated in renminbi, the market had anticipated the warrants would also be denominated in RMB.

At present, the China AMC CSI300 Index ETF and Hui Xian Reit are the only RMB-denominated underlyings eligible for warrants under Hong Kong Exchanges & Clearing guidelines.

However, many firms, including Macquarie, have expressed interest in issung RMB-denominated warrants in Hong Kong, and they are widely expected to come to market within the next few months. The delay in launching them is mainly due to settlement issues.

"We are working on fixing the system and settlement issues now," says Royan Lam, head of Hong Kong warrants sales for Macquarie Securities.

Cedric Cheung, head of warrants marketing for Hong Kong at JP Morgan, says the US bank is also studying the possibility of issuing RMB warrants. "Technically it is not a complicated issue, it just takes time to set up procedures, which should be step by step."

A hope among warrant issuers is that by issuing in Hong Kong and building that business they will be better prepared for entering the china warrants market when it opens.