Joint announcement of the China Securities Regulatory Commission and the Hong Kong Securities and Futures Commission
To further deepen mutual stock market access between the Mainland and Hong Kong (Stock Connect) and promote the development of both capital markets, the China Securities Regulatory Commission (CSRC) and the Hong Kong Securities and Futures Commission (SFC) have agreed in principle that the Mainland and Hong Kong stock exchanges will further expand the scope of eligible stocks under Stock Connect. We jointly announce that:
The CSRC previously announced to work with the SFC to expand the scope of eligible stocks under Stock Connect to include eligible foreign companies primary-listed in Hong Kong and additional A shares listed on the Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE). With the mutual support and facilitation of the two regulators, a consensus was recently reached among the SSE, SZSE, Stock Exchange of Hong Kong Limited, China Securities Depository and Clearing Corporation Limited and Hong Kong Securities Clearing Company Limited on an overall proposal to expand the scope of eligible stocks under Stock Connect.
The scope of eligible stocks will be expanded for both the Northbound and Southbound Trading Links. Specifically:
Northbound trading: Eligible stocks will include constituent stocks of the SSE A Share Index and the SZSE Composite Index which have a market capitalisation of RMB5 billion or above and meet certain liquidity criteria etc.; and SSE/SZSE-listed stocks of companies which have issued both A shares and H shares.
Southbound trading: The scope of eligible stocks will be expanded to include stocks of foreign companies primary-listed in Hong Kong which are constituents of Hang Seng Composite Indices and meet relevant criteria (ie, constituents of the Hang Seng Composite LargeCap Index and Hang Seng Composite MidCap Index, and constituents of the Hang Seng Composite SmallCap Index with a market capitalisation of HK$5 billion or above). Also, the scope of southbound eligible stocks under Shanghai-Hong Kong Stock Connect will be aligned with that under Shenzhen-Hong Kong Stock Connect, ie to include constituents of the Hang Seng Composite SmallCap Index with a market capitalisation of HK$5 billion or above.
After obtaining the consent from the CSRC and the SFC, the stock exchanges will set out the specific requirements for the inclusion of eligible stocks, adjustment mechanism etc.
Other matters not covered by this joint announcement shall be dealt with in accordance with the previous joint announcements on Stock Connect. These include trading, clearing, investment quotas, investor eligibility, cross-boundary regulatory and enforcement cooperation and liaison mechanisms, etc.
Both the Mainland and Hong Kong stock exchanges and securities registration and clearing houses will adjust related business rules and actively conduct preparation such as development and testing of technical systems and investor education. The above proposal will be launched only after the preparation for relevant trading and clearing rules and systems has been completed, all regulatory approvals have been granted, and market participants have sufficiently adapted their operational and technical systems. The preparation will take approximately three months from the date of this joint announcement. The stock exchanges will announce the official launch date in due course.