As the plans for Stock Connect developed, it became clear that
there were a number of issues which required further work by the
authorities in Hong Kong and China. On 26 September, 2014, the
Shanghai Stock Exchange ("SSE") and China Securities
Depository and Clearing Corporations Ltd ("ChinaClear")
issued detailed rules to implement stock trading under Stock
Connect. The Hong Kong Exchange and Clearing Limited
("HKEx") published on the same day a number of approved
amendments to its rules and FAQs to clarify certain key aspects of
Stock Connect. These documents provide industry participants with
welcome clarifications in a number of key areas.
This briefing will summarize the developments and focuses on
Stock Connect from the perspective of investors seeking to access
China A Shares via the Northbound Trading Link as opposed to
investors seeking to access H shares from mainland China.
Trading under Stock Connect will initially be subject to a
maximum cross-border investment quota, together with a daily quota
that will be monitored on a real time basis. A Northbound Trading
Link will be established which will permit Hong Kong investors to
place orders to trade eligible shares quoted on the SSE ("SSE
Securities") subject to an aggregate quota of RMB300 billion
and a daily quota of RMB13 billion. A Southbound Trading Link will
also be established which will permit mainland Chinese investors to
place orders to trade eligible shares listed on the SEHK subject to
an aggregate quota of RMB250 billion and a daily quota of RMB10.5
While the quotas under Stock Connect are not as large as some of
the quotas granted under the QDII, QFII and RQFII programs, we
understand that the SEHK intends to discuss allocating further
quota with SSE and ChinaClear once the above quotas are 80%
utilised. It would appear that the authorities are amenable to
expanding the scheme provided that there is sufficient demand.
On the 9 September 2016 the MFSA issued feedback to its consultation of the 1 April 2016 in relation to intra-group loans.
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