The Securities and Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) today announced 17 November 2014 as the launch date for Shanghai-Hong Kong Stock Connect (Stock Connect). Stock Connect is a pilot mutual market access programme between the Hong Kong (SEHK) and Shanghai (SSE) stock markets, initially announced in April 2014.
Significantly, next Monday will be the first time investors in the People’s Republic of China (PRC) and Hong Kong can directly access equities in the other market whilst ‘home rules’ still apply, to the extent possible, for trade and settlement of shares in the other market. Hong Kong and overseas investors will be able to access certain SSE securities in ‘northbound’ trading through brokers in Hong Kong. Institutional and qualified individual PRC investors will be able to access specified SEHK securities in ‘southbound’ trading. In both cases this is subject to daily and aggregate quotas and other regulatory and operational rules. Measures will be introduced to prevent mis-use of the quota system, including quota ‘hogging’. This follows on from the 17 October 2014 memorandum of understanding between the SFC and CSRC in respect of information-sharing; joint investigations; and complementary enforcement actions.
Investors and market participants intending to participate in Stock Connect should familiarise themselves with the applicable rules and requirements (and as appropriate, revise internal controls and risk management) – taking into account the differences, not only between the laws, regulations and rules of, but also the market practices in, the PRC and Hong Kong.
The HKEX has published updated FAQs for market participants http://www.hkex.com.hk/eng/market/sec_tradinfra/chinaconnect/Documents/EP_CP_FAQ_En.pdf.