FEX - The Financial and Energy Exchange Group

English / 中文

"Executive Chairman of Australia based Financial & Energy Exchange Group (FEX) emphasises on cooperation with industrial companies"

Mr Xing ZHENG, People's Daily Online, 25 November 2009
( Original Article )

Mr Brian Price, Executive Chairman and CEO of Australia based Financial & Energy Exchange (FEX), was recently interviewed by the People’s Daily Online. Mr Price, a frequent visitor to China, was in Beijing to attend the International Finance Forum.

During the interview, Mr Price commented that FEX had been in discussions with not just “green companies”, but also with industrial companies with the aim of helping those industrial companies transform and reposition their businesses into a more environmentally sustainable mode.

Mr Brian Price is in Beijing International Finance Forum.

Reporter: What lessons can FEX learn from the current financial crisis?

Brian Price: From its inception, FEX’s business plan was to operate regulated markets utilising advanced technological tools. FEX expects that one of the major consequences the financial crisis will be that Governments will push for markets to trade on electronic and regulated infrastructure. In particular, we expect a regulatory push to move OTC markets to electronic venues. This benefits FEX because the operation of regulated electronic markets is at the heart of the FEX value proposition.

Reporter: What is FEX’s main strategic focus in China?

Brian Price: Our strategy is to continue to promote the development of regulated financial markets and the development of sustainable technology and processes within China. We will achieve this later goal through the promotion of our clean technology equity market. We also want to part of the cooperation and mutual learning process in the development of the China capital markets.

Reporter: There are a number of moves to develop financial markets within China. Does FEX have any plans to operate in China?

Brian Price: In my opinion, whenever there is a crisis, it provides an opportunity and catalyst for positive change, including through the spread of good ideas. The movement of markets onto regulated electronic platforms is one such idea. The implementation of clean and green technology is another good idea.

Specifically on environmental market opportunities, we believe that FEX has something to offer the Chinese market participants and authorities. In addition to our ability to design and operate regulated market structures, FEX owns a world class electronic trading system for OTC markets. This is the technology on which FEX’s Australian environmental market already operates on.

We are also currently working with several partners in China in the energy and environmental sectors. These partnerships include the promotion of the adaptation of clean technology and innovation in China and discussions with potential Chinese partners for the commercialisation of early stage clean technology ideas.

We are even investigating the possibility of cooperation in the establishment of a green economy research centre in Beijing.

On the commodities front, we have had discussion with several iron ore buyers and traders with a view to improving the efficiency and transparency of pricing.

Reporter: Regarding the current price of carbon in international market, why there is a differential between the price in China and the price in international market?

Brian Price: Markets are generally efficient. If there is a price differential between for the same product traded in different venues, this differential would be quickly arbitraged away.

What this sound like to me is that there is a product differential, for example a reflection of people's confidence in the quality of one product relative to the other. In bond markets, for the same face value, Government bonds are valued higher than corporate bonds. This has to do with the confidence in the credit worthiness of the corporate relative to the Government.

Another example is on the coal market where the price of black coal is higher than that of brown coal. In this case, this comes down to an issue of the quality (embedded energy) in the coal.

Reporter: China’s first venture market opened recently. As you operate your own venture market, do you have any suggestions for the future development of China’s first venture exchange market?

Brian Price: The development of venture exchanges in China is positive move because it can further boost the economic development of China. Emerging businesses need capital to grow, and a venture market is a means for capital to form and flow to such businesses. I would emphasize that the credibility of the market relies on the credibility of its listed companies. Investors generally look at the company before they look at the market. If investors have confidence in the company, it does not matter where the company is listed.

The integrity of the whole market is based on the confidence in all listed companies. I would recommend that this new Chinese venture market focus initially, on the quality of its listed companies.

Once the “tipping point” of quality companies is reached, companies will come to list and investors will come to trade and invest.