Chinese and Hong Kong regulators announced November 17 will be the launch date for the highly anticipated Shanghai-Hong Kong Stock Connect, a mutual market access program which will open China’s domestic stock market to foreign investors for the very first time.
The announcement came from the Securities and Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) on Monday, following months of testing and discussions on certain pre-and post-trade issues.
“The two regulators have established innovative and robust mechanisms in protecting the integrity of both markets when the pilot program commences,” says Carlson Tong, chairman, SFC.
The program will allow members of the Hong Kong Stock Exchange (HKSE), owned by Hong Kong Exchanges and Clearing (HKEx), to trade China’s domestic A-share on the Shanghai Stock Exchange, and vice versa.
“The launch of Shanghai-Hong Kong Stock Connect will be a very significant breakthrough in the opening of China’s capital markets for both domestic and international investors as well as a landmark in the internationalization of Renminbi,” adds Charles Li, chief executive, HKEx.
Following the release of the launch date, Clearstream, an international central securities depository (ICSD), will provide settlement and custody services for China A-shares through its existing link in Hong Kong established with Citibank.
“The Shanghai-Hong Kong Stock Connect program responds to the financial markets’ strong interest in the Chinese currency,” says Anne-Pascale Malréchauffé, head of network management, Clearstream. “As a core market infrastructure provider, it is a cornerstone of Clearstream’s strategy to support our customers’ increasing demand to invest in Asia and to facilitate their business in those markets.”
The Stock Connect was anticipated to launch last month, following hints from HKEx’s chief executive. However a number of post-trade issues over taxation and asset ownership prevented any announcement from the regulators over the launch date.
A number of global banks in the region have announced their readiness for the Stock Connect program, including Citi and BNP Paribas.
Shanghai-Hong Kong Stock Connect to Launch on Nov 17
Chinese and Hong Kong regulators announced November 17 will be the launch date for the highly anticipated Shanghai-Hong Kong Stock Connect, a mutual market access program which will open China’s domestic stock market to foreign investors for the very first time.