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HONG KONG — Hong Kong's stock exchange is in talks with its counterparts in mainland China to set up a joint venture to develop new financial products in another step toward closer ties with markets in the world's second biggest economy.
Stock market operator Hong Kong Exchanges and Clearing Ltd. said Thursday it agreed in principle to enter detailed discussions with the exchanges in Shanghai and the southern city of Shenzhen.
The joint venture's possible businesses could include indexes and stock derivatives.
Hong Kong is a special administrative region of China with its own political system and currency. Cooperation between stock markets in Hong Kong and the mainland has so far been limited.
The exchange said the joint venture would be incorporated in Hong Kong but no there is no agreement yet.
The announcement comes a day after China's vice premier announced measures to boost Hong Kong's status as an international financial center.
The plans announced by Li Keqiang would encourage cross-border investment including the launch of an exchange-traded fund consisting of Hong Kong stocks aimed at mainland investors. He also announced steps to promote Hong Kong as a center for trading in China's currency, the yuan.
Hong Kong's bourse has already started gearing up for yuan products. In April, it held the first yuan-denominated initial public offering outside of mainland China. It's also looking at having stock listings denominated in both Hong Kong dollars and yuan.
The Shanghai and Hong Kong exchanges were the world's sixth and seventh biggest by market capitalization in the first half of the year, according to the World Federation of Exchanges.
