Macau takes another step in economic diversification plan with launch of new asset-trading exchange
- A new financial product called Daily Revenue Obligations (DROs) was launched for trading on the Micro Connect Macau Financial Assets Exchange
- The DROs can be traded by institutional investors, which provide funding for small businesses in China in exchange for part of their daily revenue
The first batch of a financial product that raised 890 million yuan (US$130 million) listed on a new asset-trading exchange in Macau, marking another step by the former Portuguese colony to diversify its economy and cut reliance on gaming and tourism.
Micro Connect Macau Financial Assets Exchange (MCEX), backed by Charles Li Xiaojia, the former CEO of Hong Kong Exchanges and Clearing (HKEX), is not a traditional bourse as it does not trade stocks or bonds, but a new asset class called Daily Revenue Obligations (DROs). Institutional investors can buy DRO units, which provide funding to China’s micro and small businesses in exchange for part of their daily revenue.
The 890 million yuan raised from international investors since 2021 was converted into DROs by Micro Connect, a Hong Kong-based fintech company also founded by Li. The funds were raised for 184 chained brands in mainland China that have a combined 2,881 stores in 169 cities.
The DROs can only be traded by members of MCEX, which is in the process of accepting memberships from banks, insurance companies, asset management firms or pension providers in Macau or other jurisdictions, a Micro Connect spokesman said. Trading is not open to retail investors, he added.
“It is hoped that after the trial operation of MCEX, the business model will be gradually straightened out and a solid risk prevention mechanism will be established,” said Chan Sau-san, chairman of the Monetary Authority of Macau, at the launch of MCEX on Saturday, which was attended by Macau Chief Executive Ho Iat-seng.
The monetary authority is keen to develop a modern financial industry by leveraging the city’s highly open financial system, and bring different types of financial institutions to Macau, Chan said.
