The Hong Kong Stock Exchange (HKEX) is set to usher in a transformative era next month with the launch of Asia’s first cryptocurrency index. This groundbreaking initiative signals a significant shift in the Asian financial landscape, as it integrates the burgeoning world of cryptocurrencies into traditional stock market operations. Market analysts are optimistic about the opportunities this presents for Hong Kong, reinforcing its status as a leading financial hub.
HKEX Embraces Crypto
HKEX has officially announced the introduction of a new index series, slated to commence on November 15, specifically tailored for cryptocurrencies. This innovative series will initially cover major digital currencies such as Bitcoin and Ethereum. In a noteworthy statement, the Asian stock market highlighted that the HKEX Virtual Asset Index Series will be the first European Union (EU)-compliant crypto index in the region. This move aims to cement Hong Kong’s reputation as a forward-thinking financial center, integrating cryptocurrency investments into the stock market framework.
Peter Chan, the HKEX Group Chief Executive, expressed enthusiasm about the upcoming launch. He emphasized that the new index series is designed to meet the regional demand for this “emerging asset class.” Chan further explained that the HKEX Virtual Asset Index Series will offer a transparent and reliable real-time benchmark, stating:
“We hope to help investors make informed investment decisions, thereby supporting the healthy development of the virtual asset ecosystem and consolidating Hong Kong’s position as an international financial center.”
With the global crypto market cap standing at a staggering $2.2 trillion, the introduction of such an index is poised to have a significant impact.
How The New Index Will Work
The new virtual index series by HKEX will facilitate real-time reference indices for Bitcoin and Ethereum. The reference index will be based on the 24-hour volume-weighted benchmark spot price of these cryptocurrencies. This means that Bitcoin and Ethereum prices will be computed based on a comprehensive 24-hour volume-weighted benchmark derived from their aggregate market value across major asset exchanges worldwide.
Furthermore, HKEX confirmed that the index would mirror current US dollar prices and provide real-time tracking and updates. Each day at 4:00 p.m. Hong Kong time, the index will undergo a regular update to reflect current prices in USD. This reference exchange rate in the new index will adjust Asia’s trading benchmarks with other global benchmarks.
Peter Chan highlighted that the HKEX Virtual Asset Index Series fortifies Hong Kong’s status as a pioneering force in the financial sector. By incorporating cryptocurrencies, it provides traders with sophisticated instruments to evaluate market value more accurately.
The EU Benchmark Regulation
Another significant aspect of the HKEX Virtual Asset Index Series is its compliance with the EU Benchmark Regulation (BMR). This makes it the first asset index developed in Hong Kong to adhere to these stringent standards. The EU Benchmark Regulation was enacted to ensure the integrity of indices used as benchmarks by EU member states. Born out of the 2008 financial crisis, this regulation imposes rigorous requirements on benchmark administrators, aiming to enhance transparency and trust in financial indices.
