EM News: BRIC Exchanges Announce Alliance


By Gordon Platt

Stock exchanges in the BRIC countries, plus South Africa, plan to cross-list equity index derivatives as the first phase of a joint initiative announced at the annual meeting of the World Federation of Exchanges in Johannesburg in October.

Brazil’s BM&F; Bovespa, Russia’s Micex (which is merging with RTS Exchange), Hong Kong Exchanges and Clearing (as the first representative from China) and JSE—the Johannesburg stock exchange—are the initial members of the alliance.

The National Stock Exchange of India and the BSE, formerly the Bombay Stock Exchange, agreed to join once requirements are finalized by the alliance. Together, the exchanges have a market capitalization of more than $9 trillion and account for more than 18% of all exchange-listed derivatives contracts worldwide.

The benchmark equity index derivatives will be offered in local currency on these exchanges by June 2012, which will allow investors in these countries to gain exposure to other emerging markets through a locally listed product.

“As a logical second phase in the alliance, the exchanges have agreed to work together to develop new products for cross-listing on the respective exchanges,” says Russell Loubser, CEO of the JSE. Eventually, the exchanges plan to cooperate in additional asset classes and services.

Hong Kong Exchanges and Clearing said in August that it had entered discussions with the Shanghai and Shenzhen exchanges with the aim of developing a joint venture based in Hong Kong to develop equity indexes and derivatives products.