MSCI Signs License Agreement with HKEX to Launch MSCI China A 50 Connect Index Futures

Rhea-AI Summary

MSCI (NYSE: MSCI) has signed a license agreement with Hong Kong Futures Exchange, allowing it to launch an index futures contract based on the MSCI China A 50 Connect Index, pending regulatory approvals. This agreement enhances the suite of MSCI futures and options launched by HKEX in 2020, highlighting their strategic partnership. The MSCI China A 50 Connect Index captures the performance of the 50 largest securities across all sectors, providing diversification reflecting the Chinese economy. This index can support various investment products, including ETFs and mutual funds.

Positive

• New license agreement with HKEX to launch MSCI China A 50 Connect Index futures.
• Enhances existing suite of MSCI Asia and Emerging Market futures and options.
• Reflects growing importance of China in global investment portfolios, with market cap share increasing from 18% to 34% (2009 to 2021).

Negative

• None.

MSCI Inc. (NYSE: MSCI), a leading provider of critical decision support tools and services for the global investment community, announced today that it has signed a license agreement with Hong Kong Futures Exchange Limited, a wholly-owned subsidiary of Hong Kong Exchanges and Clearing Limited (“HKEX”), to allow HKEX to launch an index futures contract based on the new MSCI China A 50 Connect Index, subject to regulatory approvals.

This new agreement will add to the suite of MSCI Asia and Emerging Market futures and options launched by HKEX in 2020, and underscores the ongoing strategic partnership between MSCI and HKEX.

Henry Fernandez, Chairman and Chief Executive Officer at MSCI, said, “The importance of China in global investment portfolios is growing, evidenced by the country’s market capitalization weight in the MSCI Emerging Markets Index increasing from 18% in December 2009 to 34% in August 2021. The investment industry is undergoing significant transformation and investments are becoming more complex and diversified, leading to a rise in demand for enhanced trading and risk management solutions. As part of our commitment to empowering global investors to better manage their portfolios, we are very pleased to expand our partnership with HKEX through this new license agreement.”

Nicolas Aguzin, HKEX Chief Executive Officer, said, “Today’s announcement marks a key step forward in furthering our plans to build an offshore Mainland China equities derivatives suite in Hong Kong. This exciting news further strengthens our long-term partnership with MSCI and reflects our commitment to developing Hong Kong as Asia’s premier derivatives hub, expanding the breadth and depth of product offering in Hong Kong. As the global markets leader in the Asian timezone with a unique role connecting China and the world, we believe this new product will act as key risk management tool for investors in managing their A-share equity exposure.”

As the latest addition to the MSCI China Index series, the MSCI China A 50 Connect Index (the “Index”) is designed to capture the performance of the 50 largest securities across all 11 Global Industry Classification Standard (GICS®) sectors, offering broad diversification reflecting the Chinese economy.

Using an innovative sector-neutral approach and based on the Stock Connect program, the Index mirrors the sector weight allocation of its parent index, the MSCI China A Index, and aims for sector balance by including the two largest securities from each GICS sector.

The Index can serve as the basis for index-linked investment products, such as exchange traded funds (ETFs), exchange traded notes (ETNs), mutual funds, structured products and other indexed vehicles.

About MSCI Inc.

MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 50 years of expertise in research, data, and technology, we power better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios. We create industry-leading research-enhanced solutions that clients use to gain insight into and improve transparency across the investment process.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or performance and involve risks that may cause actual results or performance differ materially and you should not place undue reliance on them. Risks that could affect results or performance are in MSCI’s Annual Report on Form 10-K for the most recent fiscal year ended on December 31 that is filed with the SEC. MSCI does not undertake to update any forward-looking statements. No information herein constitutes investment advice or should be relied on as such. MSCI grants no right or license to use its products or services without an appropriate license. MSCI MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE WITH RESPECT TO THE INFORMATION HEREIN AND DISCLAIMS ALL LIABILITY TO THE MAXIMUM EXTENT PERMITTED BY LAW.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210820005134/en/

FAQ

What is the new MSCI China A 50 Connect Index futures contract?

The MSCI China A 50 Connect Index futures contract will be launched by HKEX based on the MSCI China A 50 Connect Index, allowing investors to manage their A-share equity exposure.

When was the license agreement between MSCI and HKEX announced?

The license agreement was announced recently but is subject to regulatory approvals before implementation.

How does the MSCI China A 50 Connect Index contribute to the market?

This index captures the performance of the 50 largest securities across various sectors, providing broad diversification reflective of the Chinese economy.

What investment products can use the MSCI China A 50 Connect Index?

The MSCI China A 50 Connect Index can serve as a basis for various index-linked products, including ETFs, ETNs, mutual funds, and structured products.