SSE Infonet begins case against FTSE Xinhua
By Samuel Riding, 13 October 2006
China index market heats up as Shanghai exchange begins breach of contract case against FTSE Xinhua.
The already heated battle for space in the China equities indices market has escalated with the start of SSE Infonet’s court case against FTSE Xinhua (FXI) on Wednesday. This case began one day after the launch of MSCI Barra’s indices targeting qualified domestic institutional investors.
The subject of SSE Infonet’s claim is its agreement to provide data to FXI for its indices. It essentially argues that FXI cannot sell index information to other parties for the purpose of creating investment products.
SSE Infonet is an information provider controlled by the Shanghai Stock Exchange. The company could not be reached for comment.
SSE Infonet’s breach of contract claim was launched in Shanghai on 28 August, after Singapore’s stock exchange said it would launch a China A-share futures contract using the FTSE/Xinhua index to determine the top 50 Shenzhen- and Shanghai-listed stocks by market capitalisation.
The court case began on Wednesday after FXI promised to take a hard line against the accusation that such a contract would breach the right of SSE Infonet and the Shenzhen exchange to control data on traded stocks, thereby breaching a contract between each of the exchanges to provide data to FXI.
FXI argues that stock exchanges across the world have no proprietary right to such data and should instead make it freely available.
Mark Makepeace, co-chairman of FXI, says in a statement: “FXI is meeting the needs of domestic and international investors in China. Its practices are no different to any other index provider in China, of which there are many. We believe China wants to be part of the global market place and FXI has been facilitating this by bringing China’s markets to the world.”
According to Paul Hoff, FTSE Group’s Asia-Pacific managing director, the provision of indices is also a significant business because of external demand from investors. “There is a large number of international investors that want to invest as qualified foreign institutional investors,” he says. “The futures contract set up by the Singapore exchange is an excellent product for investors who want to access the market.”
The launch of a suite of indices by MSCI Barra is further confirmation, if any were needed, that data providers are jostling to exploit commercial opportunities to license information to product providers and overseas exchanges.
The suite includes a composite index of China A and H shares and the MSCI Zhong Hua Composite Index, which combines the existing MSCI China, Hong Kong and China A indices.
SCMP
Oct 12
FTSE/Xinhua may get China data from Elsewhere
Amy Gu
FTSE/Xinhua Index will continue to provide indices on China's A shares for futures contracts traded in Singapore even if SSE Infonet stops feeding it information, said Paul Hoff, FTSE Group's managing director for Asia Pacific.
The company, a venture between FTSE Group and Xinhua Finance, could see A-share information from other data providers, he said.
SSE Infonet may refuse to renew an agreement to provide data to FTSE/Xinhua when it expires on October 30 as a result of a court dispute, sources said.
At a hearing in the Shanghai Pudong New District Court yesterday, SSE Infonet accused FTSE/Xinhua of breaching a contract by using its data to license futures products in Singapore.
A WALL STREET JOURNAL NEWS ROUNDUP
October 12, 2006
FTSE Says Shanghai Lawsuit
Won't Halt Index Calculation
British index provider FTSE Group said a lawsuit by a Shanghai Stock Exchange unit wouldn't prevent it from compiling Chinese stock indexes, regardless of the outcome.
SSE Infonet Ltd., a data-management unit of the Shanghai Stock Exchange, sued FTSE/Xinhua Index in August over the right to provide price information for a futures contract based on the FTSE/Xinhua A50 Index and launched on the Singapore Exchange Sept. 5, alleging the FTSE/Xinhua contract with Singapore is a violation of China's intellectual property.
The index consists of the top 50 Class A shares by market capitalization on the Shanghai and Shenzhen exchanges. A hearing at Shanghai's Pudong New Area District Court didn't result in a decision yesterday, and Paul Hoff, FTSE's managing director for the Asian-Pacific region, said it wasn't clear when one would be made.
But Mr. Hoff said that even without the contract, FTSE/Xinhua can still access the data needed to calculate the related indexes. FTSE/Xinhua Index is a Hong Kong-incorporated joint venture between FTSE Group and Shanghai-based financial-information and media-services firm Xinhua Finance Ltd.
An SSE Infonet official who attended the hearing declined to comment.
The case could have a substantial impact on the market, Mr. Hoff said, if the outcome affects the ability to create indexes based on Chinese shares. "It's not simply a commercial issue. It's really establishing intellectual-property rights on a global standard," he said.
The uncertainty caused by the case has been affecting demand for the SGX FTSE Xinhua China A50 index futures. It is the first futures contract outside mainland China to be based on Chinese Class A shares, and it pre-empts China's plans to start the country's own derivatives trading this year.
Dow Jones
1157 GMT Oct 11, 2006
FTSE: China Index Case Outcome Won't Affect FTSE Service
SHANGHAI (Dow Jones)--The outcome of a lawsuit against a FTSE Group joint venture brought by a unit of the Shanghai Stock Exchange won't affect FTSE's global index-related services, a FTSE executive said following a court hearing Wednesday.
But the hearing, which took place at Shanghai's Pudong New Area District Court, didn't result in any decisions, and FTSE's Managing Director for Asia Pacific Paul Hoff, who attended the three-and-a-half hour hearing, said it wasn't clear when a decision would be made.
SSE Infonet Ltd. launched the suit against FTSE/Xinhua Index Ltd. late August after FTSE/Xinhua entered into a contract with the Singapore Exchange Ltd. (S68.SG) for a futures contract based on the FTSE/Xinhua China A50 Index. The index consists of the top 50 China A shares in terms of market capitalization on the Shanghai and Shenzhen stock exchanges.
SSE Infonet alleges that the FTSE/Xinhua futures contract with Singapore is a violation of China's intellectual property.
FTSE/Xinhua Index is a Hong Kong-incorporated joint venture between global index provider FTSE Group and Shanghai-based financial information and media services firm Xinhua Finance Ltd. (9399.TO).
"We believe that this particular court case is very important for the China market as they open up to the rest of the world, to (show) that investors and data service providers are protected," Hoff told reporters in a conference call.
"It's not simply a commercial issue. It's really establishing intellectual property rights on a global standard," Hoff said.
But even in the worst case scenario, index services provided to clients, or the SGX FTSE Xinhua China A50 Index Futures in Singapore launched recently, wouldn't be affected, Hoff said.
Hoff said the contract between FTSE/Xinhua and SSE Infonet expires at the end of this month, but even without the contract FTSE/Xinhua can still access all the data needed to calculate the China stock related indexes.
FTSE/Xinhua is the only China index provider to have a contract with the Shanghai Stock Exchange, and other international index providers all provide China stock related indexes without a contract, according to Hoff.
Hoff said there is no separate contract signed with the Shenzhen Stock Exchange.
"We have been attempting to bring international standards to the China market. We've made an effort to have a contract with Shanghai, which is obviously quite sensitive about share price information, and this is what we get for it," Hoff said.
The uncertainty caused by the case has been affecting demand for the SGX FTSE Xinhua China A50 Index Futures, which was launched Sept. 5 despite the lawsuit. It is the first futures contract based on a China A-share index, and has preempted China's plans to start its own financial derivatives trading this year.
-By Jane Lanhee Lee, Dow Jones Newswires; (86-21) 6120-1200; jane.leedowjones.com
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Reuters
Wednesday October 11, 8:01 PM
CORRECTED-China court battle over futures unavoidable-FTSE
SINGAPORE, Oct 10 (Reuters) - British index provider FTSE Group said on Tuesday it had failed to reach an out-of-court settlement on the legal challenge in China over the Singapore Exchange's new futures contract on China A-shares.
SSE Infonet Ltd., a data management unit of the Shanghai Stock Exchange, is suing FTSE/Xinhua Index, alleging violation of intellectual property.
FTSE/Xinhua is a joint venture between Britain's FTSE Group and Tokyo-listed Xinhua Finance , a Shanghai-based financial information and media services firm.
FTSE said last month it was in talks with Chinese firms to avoid a court battle over the new futures contract based on 50 China A-shares , which started trading on Singapore Exchange Ltd. (SGX) on Sept. 5.
But Paul Hoff, managing director for FTSE Asia-Pacific, told Reuters the court case would begin on Wednesday and is likely to be a test of fair competition in China's financial markets.
"This is important for China because if it opens up its market to international investors there has to be a level of confidence, a level playing field," Hoff told Reuters from Hong Kong .
Hoff said FTSE/Xinhua has hired a team of international and local lawyers to fight the case.
Chinese official media have reported that Shenzhen Securities Information Co., which manages the data for the Shenzhen stock exchange, had also filed a lawsuit against FTSE/Xinhua Index. It was unclear when the hearing for that case would begin.
The index, compiled by FTSE/Xinhua Index, consists of the top 50 Shanghai- and Shenzhen-listed stocks by market capitalisation.
The new contract is the first futures contract based on China A-shares outside mainland China and underscores Singapore's ambition to be a leading derivatives centre.
Singapore Business Times
Oct 11, 2006
FTSE Group is a joint venture between the Financial Times and the London Stock Exchange .
It stands firm on its right to run real-time indices for the China market
FTSE Xinhua Index has stood by its right to run real-time indices for the China
market a day before a copyright infringement case filed by Shanghai Stock
Exchange is to be heard in court.
In a statement yesterday, co-chairman of FTSE Xinhua, Mark Makepeace, said
the company has not violated its contract with the Shanghai Stock Exchange when
it started calculating the SGX FTSE Xinhua China A50 Index. He added that it is
the responsibility of all exchanges globally 'to provide access to quotes on
equitable terms to all parties'.
'The Shanghai Stock Exchange is the only provider of stockmarket prices for
companies listed on the exchange,' Mr Makepeace said. 'FTSE Xinhua Index has
not violated its contract with the Shanghai Stock Exchange. More importantly,
we believe quotes should be in the public domain as they are elsewhere in the
world.'
SSE Infonet, which manages data for the Shanghai Stock Exchange, recently
filed a suit in a Shanghai court, claiming that FTSE Xinhua is in breach of
contract with its calculation of the new index.
A district court in Shanghai will start hearing the lawsuit today, which
seeks to stop the SGX FTSE Xinhua China A50 Index from trading on the Singapore
Exchange (SGX), Chinese media had reported.
The SGX FTSE Xinhua Index started trading on Sept 5.
The FTSE Group had hoped that FTSE Xinhua Index, its venture with Xinhua
Finance, would be able to settle the matter amicably.
'We're hoping to continue our conversations and continue to solve this
without having to go to court,' Paul Hoff, Asia-Pacific managing director of
FTSE Group, said after the launch of the SGX index.
'We believe the contract we have in place, we are operating within the terms
of that.'
FTSE Xinhua yesterday reiterated that its practices are no different than
any other index provider in China, of which there are many.
It added that FTSE Xinhua has been facilitating China's goal to be part of
the global market place by bringing the country's markets to the world.
'All global markets encourage diverse products to be created and listed on
exchanges worldwide for transparency and liquidity and FTSE index products are
doing this for China,' Mr Makepeace said. 'We feel the outcome of the court
case is important for the development of China's financial market.'
The Striat Times
Oct 12, 2006
SITNews: No ruling yet on FTSE Xinhua case
by Tschang Chi-Chu
IN BEIJING - A COURT heard the Shanghai Stock Exchange's landmark lawsuit over who owns the intellectual property rights to its share price indexes yesterday but did not rule on the case.
The defendant, FTSE Xinhua Index, has offered to settle the case out of court but the stock exchange appears to want to go through with the lawsuit.
Both sides presented their case before a panel of three judges at the Shanghai Pudong New Area People's Court yesterday. The court adjourned after 3 1/2 hours without saying if there would be a second hearing or when a ruling would be made.
Asia-Pacific managing director of FTSE Group, Mr Paul Hoff, said after the hearing: 'We believe this particular court case is very important to the China market as it opens up to the rest of the world, particularly in ensuring that the rights of investors and service providers are protected.
'It's not simply a commercial issue. It's really establishing intellectual property rights on a global standard and this is one of the things FTSE Xinhua has been attempting to do in local markets.'
The Shanghai bourse's arm, SSE Infonet, sued the FTSE Group and Xinhua Finance joint venture for US$20,000 (S$32,000) in August to try to prevent them from providing a stock price index to the Singapore Exchange (SGX).
To the embarrassment of the Shanghai Stock Exchange, Singapore last month beat Shanghai to rolling out the world's first futures contract index to be based on FTSE Xinhua's index of the 50 largest companies listed in Shanghai and Shenzhen.
In its lawsuit, the Shanghai Stock Exchange claims that FTSE Xinhua Index breached its contract by allowing the SGX to use its China A50 Index without the exchange's permission.
Mr Hoff also noted it was 'quite odd' that FTSE Xinhua has become the target of a lawsuit considering it is the only index provider that has signed a contract with the Shanghai bourse.
FTSE Xinhua's contract with the Shanghai Stock Exchange expires at the end of this month.
Even if the contract is not renewed, Mr Hoff said that FTSE Xinhua will continue to calculate and provide indexes to bourses in Hong Kong and Singapore as well as to Chinese government and financial institutions without interruption.
Naomi likes this photo taken at a restaurant on the road from Hiekawa to Amagikogen. We visited this restaurant with Eiichi Onodera and his wife several years ago to have inoshishi nabe. This time it was for the udon, but we had some cold inoshishi rib tidbits to knaw on and a plate of warm inoshishi "aburi" to chew too. 
