Chinese regulator agrees to further open stock markets to international community

Rick Steves

The Chinese regulator stated that expanding the scope of underlying stocks eligible for trading under Chinese mainland-Hong Kong Stock Connect mechanisms is an important measure of CSRC to earnestly implement the guiding principles of the 20th CPC National Congress.

china

The China Securities Regulatory Commission and Hong Kong’s Securities and Futures Commission (SFC) have together announced the (in principle) further expansion of the scope of underlying stocks eligible for trading under Chinese mainland-Hong Kong Stock Connect mechanisms.

The pragmatic cooperation between Chinese mainland and Hong Kong capital markets and the expansion of the programme will gain further visibility in international markets with the global expansion of HKEX, which has just opened an office in New York.

The New York office will provide an on-the-ground dedicated team for HKEX’s North American customers and will promote the exchange operator’s liquid primary and secondary cash markets, as well as its exclusive connectivity with Mainland China’s markets and its diverse suite of derivatives.

Underlying stocks eligible to include stocks of foreign companies

For the underlying stocks eligible for the northbound trading under the Shenzhen Connect, the constituent stocks of the SZSE Composite Index that have a market capitalization of CNY 5 billion or above and meet certain liquidity criteria will be selected to replace the constituent stocks of the Shenzhen Component Index and the SZSE Small/Mid Cap Innovation Index with a market capitalization of CNY 6 billion or above under the Shenzhen Connect, while the A shares that have issued both A shares and H shares will still be included according to current arrangements.

The scope of the underlying stocks eligible for the southbound trading under the Hong Kong Connect will be expanded, on the basis of the existing scope, to include the stocks of foreign companies primarily listed in Hong Kong which are constituents of the Hang Seng Composite Indices and meet relevant criteria.

After the expansion, with more SZSE-listed stocks included under the Shenzhen Connect, it will provide investors outside Chinese mainland with more choices of growth, innovation-oriented assets for allocation and attract medium and long-term capital from outside Chinese mainland. The inclusion of foreign companies into the scope of underlying stocks eligible for the southbound trading under the Hong Kong Connect will further support Hong Kong improving its attraction to international companies.

Access to Mainland China markets is part of guiding principles of the 20th CPC National Congress

The Chinese regulator stated that expanding the scope of underlying stocks eligible for trading under Chinese mainland-Hong Kong Stock Connect mechanisms is an important measure of CSRC to earnestly implement the guiding principles of the 20th CPC National Congress, actively serve the creation of a new development pattern, and promote high-standard, two-way opening up of capital markets.

“It is of positive significance to facilitating cross-border investment activities of investors in and outside Chinese mainland and promoting the coordinated development of Chinese mainland and Hong Kong markets. Next, SZSE will follow the unified plan of CSRC and adhere to the general principle of seeking progress while maintaining stable development. We will work with relevant parties including HKEX, CSDC and HKSCC to make adequate business and technological preparations, release the specific arrangements for the expansion of the scope of stocks including the selection criteria of eligible stocks, adjustment mechanism and implementation time to the market as soon as possible, and put forth effort to ensure the smooth implementation of the expansion.”

Read this next

Inside View

Broadridge report finds 27% of firms’ overall IT budget goes to digital transformation

“A new chapter in digital transformation is emerging. In our work with clients across the financial services industry we see leading firms are already reaping the benefits from digitalization and the use of technologies such as AI and blockchain/DLT, as they adapt to economic headwinds and new competitive dynamics”

Executive Moves

Ripple announces Monica Long as President

“I’m incredibly honored to take on the role of President at Ripple as we expand deeper into crypto-enabled services like liquidity, settlement and custody.”

Executive Moves

Arabesque AI appoints Carolina Minio Paluello as CEO

“Arabesque AI is uniquely positioned to service the asset management industry’s need to meet the growing market demand for hyper customised portfolios.”

Industry News

SEC Commissioner Mark T. Uyeda says standardized ESG measures are doomed to fail

“Because ESG ratings may be divorced from matters of financial materiality, they can reflect a particular political or social agenda.”

Industry News

Worldline launches digital payments suite in India

“Our low-cost innovative offering SoftPOS will empower SMBs in a big way to accept digital payments affordably.”

Technology

cTrader Web 4.5 Presents Guest Mode, Multiple Charting and Copy Improvements

Spotware has announced the release of its cTrader Web version 4.5, which comes with a whole range of features and improvements for all cTrader users.

Technology

SteelEye suggests integrated surveillance as Morgan Stanley fines employees over WhatsApp

“The use of integrated surveillance means firms can avoid unwanted regulatory attention by enabling them to self-report and self-remedy more efficiently when malpractice is flagged.”

Industry News

ASIC bans Gregory William Finerty for unlicensed FX algo trading bot

Bradford AI leased an algorithmic trading program known as ‘Robot 1’ to trade on the FX market, using an Australia-based over the counter contracts for difference (CFD) broker.

Opinion

With the recent changes to St Vincent licensing, what will the future trends be for licensing in 2023?

New St. Vincent and the Grenadines regulations came as somewhat of a shock for those brokerages that are only regulated in SVG

<