Hong Kong and the mainland should develop one China market -- a single listing and trading platform covering Hong Kong, Shanghai and Shenzhen, a local newspaper quoted the Hong Kong bourse chief as saying.
Hong Kong Exchanges and Clearing chief Ronald Arculli told the South China Morning Post that a possible share swap would boost links between the three markets and, while a full merger would be hard to achieve, it would not be ruled out.
"A full merger would not be ruled out but it needs to cope with a lot of difficulties such as the convertibility of the yuan and the structure of the exchanges," it quoted Arculli as saying. He added that a single China market would be more practical.
Arculli said a proposed pilot scheme to allow mainland investors to invest directly in Hong Kong stocks, and dual listings of mainland firms in Hong Kong and China were already steps toward a single China market. He gave no further details.
His comments came a week after the Hong Kong government raised its stake in the territory's stock exchange, Asia's largest listed bourse operator, to 5.88%.
Hong Kong Financial Secretary John Tsang had said on Wednesday the Hong Kong government may pursue closer ties with mainland stock exchanges by way of share swaps.
Tsang said the government's stake increase would also facilitate cementing Hong Kong's position as an investment window to the mainland by developing closer links with China's Shanghai and Shenzhen exchanges.