Expanded cooperation in capital markets between Macau and Luxembourg
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Expanded cooperation in capital markets between Macau and Luxembourg

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João Nuno Riquito and Hália Cerqueira of Riquito Advogados report on a one-stop dual listing initiative between Macau and Luxembourg that is expected to build international financing channels and foster financial innovation

In September 2021, a general plan was announced for the Deep Cooperation Zone between Guangdong and Macau as a means to promote the diversification of Macau’s economy. This was a significant step to foster the Greater Bay Initiative and, generally, the implementation of the ‘one country, two systems’ principle. In this context, the financial sector has been identified as one of the four pivotal industries to play a notable role in connecting Macau with the Portuguese-speaking countries and Europe.

In April 2023, during official exchanges between the Macau Special Administrative Region and Luxembourg, the Luxembourg Stock Exchange (LuxSE) and Chongwa (Macao) Financial Asset Exchange Co. (MOX) signed a cooperation agreement extending the scope of their collaboration to include the admission of MOX-listed securities for trading on LuxSE’s exchange-regulated market, the Euro MTF.

MOX is the first financial institution providing a financial trading platform for bond issuance, listing, trading and settlement services in Macau, as approved by the Monetary Authority of Macao (AMCM), established in 2018 by Executive Order No. 94/2018.

LuxSE, in its turn, is a global market pioneer in debt securities listing and the world’s first and leading platform dedicated exclusively to sustainable financial instruments, which has maintained a dominant position in European bond issues and leading exchanges for renminbi-denominated bonds outside Asia.

A strengthening relationship

The relationship between MOX and LuxSE was initiated in January 2020 when the institutions signed a memorandum of understanding (MoU) in Macau. In mid-2021, the launching of a one-stop dual listing initiative between both exchanges ushered in a new chapter for the diversification of offshore bond listing routes for issuers to promote financial innovation.

The bonds dual listing marks a breakthrough in building international financing channels for multi-currency and cross-border two-way capital operation systems, bridging domestic and overseas markets and demonstrating high-quality credit qualification to the international capital market.

The initial MoU was followed by the signing of a cooperation agreement in 2022, focusing on enhancing the visibility of securities listed on MOX with international investors via admissions on LuxSE’s Securities Official List. This collaboration brings a wider selection of investment opportunities to global investors and offers companies access to a large pool of potential investors, while contributing to portfolio diversification and yield enhancement, especially in emerging Asian markets.

Bond issuance

The legal framework for financial activity is under revision at the Macau Legislative Assembly, with a view to addressing, among others, the requirements for approval of bond issuance, bringing it more in line with international standards, and implementing a single registration system for bonds open for public subscription. Meanwhile, some of the regulatory directives issued by the AMCM regarding these matters are also under discussion for possible revision.

Until October 2022, 136 bonds had been issued or listed in Macau as negotiable instruments – namely corporate bonds, financial bonds and green bonds – amounting to an aggregate of MOP 344.8 billion (approximately $42.5 billion). According to a report by the International Capital Market Association released in March 2023, more than 13% of Asian issuers chose to list their first international bond issuance on MOX in 2022 and Macau has become the second-largest listing venue for their first international bond issuance in Asia.

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