Euroclear Bank and the newly created Shanghai Clearing House have signed a Memorandum of Understanding (MoU) as the basis to build a close co-operative relationship.

Under the MoU, Shanghai Clearing House and Euroclear will explore how best to co-operate on securities clearing, settlement and related matters in supporting clients active in the Chinese financial markets and in those capital markets covered by Euroclear. The relationship aims at providing a more efficient post-trade infrastructure that will facilitate cross-border investment, as well as strengthen the risk-mitigation capabilities of Shanghai Clearing House for its clients.

The agreement stipulates a programme of cross-company staff training in order to develop a better understanding and knowledge of the respective financial markets. The MoU also covers the exchange of business model information, the potential application of market standards and a wide range of possible transaction-processing improvement opportunities.

Launched on 28 November 2009, Shanghai Clearing House, with a registered capital of RMB 300 million (EUR 29 million), will mainly provide a broad range of clearing services for financial transactions. China Foreign Exchange Trade System, China Government Securities Depository Trust & Clearing Co.
China Banknote Printing and Minting Corp., and China Gold Coin Inc. hold 46.67%, 33.33%, 10% and 10% stakes in the new entity, respectively.

The launch of Shanghai Clearing House is a significant measure targeted at tackling the global financial crisis, deepening the reform of financial markets, improving financial infrastructure, and building Shanghai into a global financial centre. Reportedly, transaction volume in China’s interbank lending and bond markets amounted to RMB 114 trillion (EUR 11 trillion) in 2008, almost six times more than the figure of five years ago.