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UPDATE 1-Hong Kong Exchange CEO says MSCI consultation may lead to index deal
March 27, 2017 / 6:50 AM / 9 months ago

UPDATE 1-Hong Kong Exchange CEO says MSCI consultation may lead to index deal

* MSCI consultation process hints at compromise

* World’s biggest IPO venue struggling with new listings

* Years away from implementing an identity trading system (Adds details, quotes)

By Michelle Price

HONG KONG, March 27 (Reuters) - Hong Kong Stock Exchange CEO Charles Li said a new consultation process initiated by global index provider MSCI suggested a compromise or interim solution to a lengthy wrangle to get Mainland China shares included in its emerging markets index could be found.

“You don’t really want to do that unless you’ve decided there is a greater likelihood of some kind of action,” Li said on Monday at the annual Credit Suisse Asian Investment Conference in Hong Kong.

While MSCI did not include mainland shares in its widely tracked emerging markets index for the third year running in 2016, market watchers are slightly more optimistic about a favourable outcome this year.

Li said he would consult market participants on whether or not to launch weighted voting rights which offer voting characteristics tailored to different classes of shares.

Li noted the Hong Kong exchange was years away from implementing a mainland-style “identity trading” system, in which the beneficial owner of shares traded on the exchange has to be known to or identifiable by the exchange, unlike the current system where investors can remain anonymous via nominee accounts held for them by others.

Hong Kong brokers currently only provide information on client activity only when requested by authorities.

In January, Hong Kong Exchanges and Clearing Ltd said the bourse was proposing to launch a new listing venue that would allow companies with different voting rights to go public in the city, in a bid to remain a global listings powerhouse.

Hong Kong, which was the world’s biggest IPO venue last year, has been struggling to attract new listings. Its previous efforts to allow companies which had shares with different voting rights on to its main exchanges failed to get support from regulators.

Writing by Saikat Chatterjee; Editing by Randy Fabi and Eric Meijer

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