Western stock exchanges look to China for market growth

By Huw Jones

LONDON (Reuters) - China offers better growth prospects for stock and derivatives exchanges as making money in mature western markets becomes tougher due to overcapacity, top bourse officials said on Tuesday.

"Clients are really trying to get access to Asia and China right now," Jeff Sprecher, chairman and CEO of the Intercontinental Exchange, told the IDX derivatives conference in London.

Chinese capital flows were already phenomenal and would increase as the regulatory burdens came down, said Sprecher whose company runs the New York Stock Exchange and one of Europe's top derivatives exchanges.

While western bourses vie for a slice of the Chinese market, a stock trading "bridge" between its mainland and Hong Kong markets had already been opened by local operators.

"China is growing like crazy... It's true, everybody needs a China strategy," said Garry Jones, co-head of global markets at Hong Kong Exchanges & Clearing (HKEX).

China is set to have a bigger middle class than the whole of the European Union by 2020, he added.

Singapore Exchange President Muthukrishnan Ramaswami said competition in mature economies would focus on price rather than on new infrastructure or shifts in markets and services.

Deutsche Boerse is teaming up with the Shanghai Exchange and Andreas Preuss, CEO of Deutsche Boerse's Eurex derivatives unit, said he was certain it would become a powerful channel for tapping liquidity from mainland China.

The German exchange is building up a footprint in Singapore, but Jones suggested that Deutsche Boerse had catching up to do in Asia as HKEX already has a market capitalisation of almost three times that of its German rival.

"We might even buy you before lunchtime," Jones quipped.

But Sprecher said there were still opportunities for growth in the west such as helping customers make sense of the massive amounts of data reported to regulators, and piecing together framgemented markets.

Innovation and developing the retail market for derivatives well were also other growth areas, Preuss said.

(Reporting by Huw Jones; editing by Susan Thomas)