Hong Kong: A-Shares - Improved settlement model via Special Segregated Account (SPSA)
LuxCSD1 would like to inform customers that, effective
4 July 2016
Customers can settle delivery versus payment (DVP) and safekeep China 'A-shares' by setting up a Special Segregated Account (SPSA) under Shanghai-Hong Kong Stock Connect Program. This enhancement eliminates the need for the 'pre-delivery' of shares and provides a "True DVP" solution2.
Stock Connect facilitates foreign investors’ access to the Chinese market via the Hong Kong Market and makes it possible for non-domestic investors to hold China A-shares without the need to fulfil qualified investment requirements.
Stock Connect is a further step in the opening of the Chinese stock market for foreign investors and goes hand-in-hand with the Chinese government’s approach to establish the Renminbi as an international currency and to liberalise its financial market.
The improved DVP settlement model is part of LuxCSD’s ongoing commitment to enhance its settlement services and to provide our international customers with access to RMB-denominated shares that are listed on the Shanghai Stock Exchange (A-shares). This initiative further complements our existing access to Chinese B-shares that are listed on the mainland stock exchange.
Impact on customers
To safekeep China 'A-shares', customers must open a Special Segregated Account (SPSA). Clearstream Banking3 can support customers in the account opening process including in the setting up of the SPSA account, acquiring the Investor ID and maintaining the SPSA eligible Executing Brokers.
Morning / afternoon settlement timings will not be applicable via the SPSA model. The free of payment and against payment settlement instruction deadlines will be as follows:
Central European Summer Time (CEST)
| Instruction | Deadline from 4 July 2016 |
| Receipts free of/against payment | 11:55 SD |
| Deliveries free of/against payment | 10:40 SD |
Hong Kong Time (HKT)
| Instruction | Deadline from 4 July 2016 |
| Receipts free of/against payment | 17:55 SD |
| Deliveries free of/against payment | 16:40 SD |
Further information
The Creation Link Guide – Hong Kong and related documentation will be updated in due course.
For further information, customers may contact LuxCSD Client Services or their Relationship Officer.
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1. LuxCSD refers to LuxCSD, société anonyme registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, Luxembourg, registered with the Trade and Company Register of Luxembourg, under number B. 154 449.
2. "True DVP" refers to receiving cash proceeds immediately upon settlement of DVP transaction. Investors must use any of the brokers (Citi Global Markets) who appoint Citi as third party clearer or settlement agent.
3. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for CBF customers using CreationOnline), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.