Shanghai’s legislative advisers urge city’s financial exchanges to merge and list to open the world’s second-largest market place

Twenty delegates to the Shanghai People’s Political Consultative Conference (SPPCC) have called for the merger of the local stock and futures exchanges

The delegates proposed the establishment of a holding group, under which the Shanghai Stock Exchange (SSE), the China Financial Futures Exchange, various securities depository and clearing companies as well as an options exchange can be built

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A view of the Lujiazui business and financial district in Shanghai on 9 November 2020. Photo: EPA-EFE

Published: 8:50pm, 25 Jan 2021Updated: 11:35pm, 25 Jan 2021

A score of Shanghai’s legislative advisors have called for the merger of the local stock and futures exchanges to attract global companies and investors raising funds, as the city marked 30 years of explosive growth to become the elder sibling of the world’s second-largest capital market.

The merger was proposed by 20 delegates of the Shanghai People’s Political Consultative Conference (SPPCC), including the Shanghai Gold Exchange chairman Jiao Jinpu, the Shanghai chief of the Export-Import Bank of China (ExIm), and the Agricultural Bank of China’s city president Chen Qichang, according to a bill obtained by the South China Morning Post.

The delegates proposed the establishment of a holding group, under which the Shanghai Stock Exchange (SSE), the China Financial Futures Exchange, various securities depository and clearing companies as well as an options exchange can be built, according to the plan. Shares of the new holding company can either be listed in Shanghai, or in Hong Kong, according to their proposal.

“Exchanges need massive funds and modern governance to participate in the global competition,” they said in their submission. “Amid the geopolitical shifts and the readjustment of China’s domestic economic structure, the creation of a holding group after consolidating the local exchanges is an effective way of revving up the internationalisation and opening-up of the country’s capital market.”

The proposal underscores the continuous search for the next paradigm shift in China’s capital markets, three decades after Shanghai - and its smaller sibling in Shenzhen - became synonymous with the nation’s experiments in market reforms. At US$11.56 trillion in combined market value, the two markets have grown from scratch to become the world’s second-largest in that span, behind the US whose history on Wall Street dates back to May 1792.