Deutsche Boerse Starts Yuan Market With Chinese Exchanges

(Bloomberg) — Deutsche Boerse AG is creating a joint venture with two Chinese exchanges to offer yuan-denominated instruments, giving European investors increased access to the worlds second-largest economy.

The agreement between the German markets operator, Shanghai Stock Exchange and China Financial Futures Exchange will establish a Frankfurt-based venue for investors outside China to trade renminbi-denominated securities, according to a statement on Wednesday. The venture, called China Europe International Exchange, will start offering cash instruments in the fourth quarter.

The Chinese authorities are taking steps to achieve greater internationalization of the yuan with the intention of making it a reserve currency. Global investors, meanwhile, are keen to pour cash into one of the worlds largest and fastest growing economies.

It will help pave the way for further opening up of Chinas capital market and contribute to renminbi internationalization, Zhang Shenfeng, chairman of China Financial Futures Exchange, said in the statement.

The Shanghai Stock Exchange and Deutsche Boerse will each own 40 percent of the new venture, according to the statement. CFFE will hold the remaining 20 percent stake.

The market will enable Europeans to trade yuan-denominated instruments based on Chinese assets, but it will not give investors direct access to the countrys capital market. International investors that lack specific approval from the Chinese authorities can only trade directly through the Hong Kong-Shanghai link known as Stock Connect.

China Construction Bank Corp. listed an exchange-traded fund on the London Stock Exchange in March. The money-market fund denominated in yuan gives European investors access to Chinas interbank bond market.