Former Hong Kong Stock Exchanges and Clearing Limited (HKEx) boss Charles Li has been given the green light to operate financial and investment services in Macau.
In a recent press statement, Micro Connect, a financial company that Li founded last year in Hong Kong, said that it was “pleased to announce that it has received the authorization to establish and operate Micro Connect (Macao) Financial Assets Exchange Co., Ltd. in the Macau Special Administrative Region for services related to the trading of financial assets.”
The approval was given in Executive Order No 47/2022 dated November 30, which also states that the company must not have capital lower than MOP120 million.
Micro Connect focuses on the development of a new financial market platform to offer global investors access to China’s economy with a new asset class – Daily Revenue Contract Certificates, or “DRCCs”, the company’s statement says.
DRCCs represent entitlements to daily revenue shares from micro and small businesses in China’s brick-and-mortar consumer economy.
The exchange will provide an efficient and transparent market platform that connects China’s micro economy with global capital while offering new investment opportunities to global investors. In due course, the exchange plans to provide services related to the trading of other financial assets, the statement adds.
The statement also notes that the company will operate on a blockchain-enabled technology platform and is ready to deliver innovation to the capital markets in China and beyond.
As of November 30, 2022, Micro Connect has collaborated with more than 170 brands and chains to invest in nearly 1,800 stores in retail, food & beverage, services, and culture & sports across more than 140 cities in 31 Chinese provinces and municipalities, the company said.
“We are excited about launching this new exchange and developing a more inclusive and sustainable financial market,” Li, founder and chairman of the company said. “The exchange will be at the core of our Micro Connect market ecosystem – a platform that will offer liquidity and price discovery for a new asset class, to enable investors to deploy capital more efficiently.”
Moreover, the company highlighted that it is a new financial market platform connecting global capital with China’s micro and small businesses. The company has created Daily Revenue Contracts (DRCs) as a new asset class for direct and diversified exposure to the daily, transparent cash flows from millions of stores in China’s vibrant consumer economy, while making capital more accessible and affordable to business owners.
Modern financial service is one of the five core areas in which the Macau government intends to invest in the attempts to diversify the city’s economy. It is widely agreed that the city has been over-reliant on the income from casino activities.
Discussing this, Katrina Hamlin, commentator at Reuters, described the approval for Li as “a coup for Macau.”
She referred to the city as “increasingly desperate to diversify beyond gambling into finance.”
In fact, a formal stock market has not yet been established in Macau, but Beijing has allowed the premier sales of several mainland bonds in Macau. A product holding and clearing entity, the Macao Central Securities Depository and Clearing Limited (MCSD), has been set up as part of the attempt to foster further progress in diversifying the economy.
