Shanghai-Hong Kong Stock Connect Programme
Note: This announcement first published on 11 November 2014 has been updated to reflect the correct settlement timings in CET.
Effective
17 November 2014
Settlement and custody services for Chinese A-shares will be available to customers and Clearstream Banking1 via the Shanghai-Hong Kong Stock Connect Programme (the “Programme”).
The services will be offered via our existing Hong Kong depository Citibank N.A. (Hong Kong Branch).
Background
The Programme provides securities trading and clearing link to the Hong Kong Exchanges and Clearing Limited (HKEx), the Shanghai Stock Exchange (SSE) and the China Securities Depository and Clearing Corporation Limited (ChinaClear), enabling mutual market access between Mainland China and Hong Kong.
Under the Programme, HKEx and the SSE will establish mutual order-routing connectivity and related technical infrastructure to enable the investors in their respective market to trade designated equity securities listed in the market of the other participants.
Hong Kong and international investors will get direct access to China A-shares listed at the SSE via the Northbound Trading and Mainland Chinese investors will be able to trade eligible securities listed at HKEx via the Southbound Trading.
Restrictions
Please note that home market rules and laws apply for the SSE securities.
Free of payment
As per the existing market infrastructure, market settlement of Chinese A-shares via the Shanghai-Hong Kong Stock Connect Programme will be on a free of payment basis only; DVP instructions will be rejected by HKEx.
Types of transfers
Bridge settlement will not be allowed.
Customers will not be allowed to instruct internal transfers within Clearstream. As stipulated in Article 11 of the China Securities Regulatory Commission (CSRC) Stock Connect Rules, transfers of SSE Securities should be conducted on-exchange only and off-exchange trading is not permitted except in specific circumstamces.2
Pre-funding of account and short-selling
Short-selling and margin trading are not allowed. Customers must ensure that there are sufficient stock holdings with their brokers prior to placing an order in the market. Customers will need to pre-deliver shares to their broker on T-1 or on the morning of Trade date (T). See Settlement details below.
Eligible securities
Eligible shares for the Programme:
- All constituent stocks of the SSE 180 and 380;
- All dual-listed shares, that is SSE-SEHK A+H (68).
Trading days
In the initial stage of operation of the Programme, participants can only trade the A-shares on a Hong Kong business day, provided that both markets are open for trading and banking services are available in both markets on the corresponding money settlement days (T+1).
Below is an example illustrating the 2015 holiday arrangement of Northbound trading:
| Date | HK | Mainland | Securities Settlement (for T-day's trades) | Money Settlement (for T-1 day's trades) | Trading (T-day)) |
| 1 Apr (Wed) | Business Day | Business Day | Yes | Yes | Yes |
| 2 Apr (Thu) | Business Day | Business Day | No | Yes | No |
| 3 Apr (Fri) | Public Holiday | Business Day | No | No | No |
| 6 Apr (Mon) | Public Holiday | Business Day | No | No | No |
| 7 Apr (Tue) | Business Day | Business Day | Yes | Yes | Yes |
a. 2 April 2015 (Thu) is a business day for both Hong Kong and Mainland China. However, if customers trade SSE Securities on 2 April 2015, they will not be able to settle money positions on 3 April 2015 (Fri), which is a public holiday in Hong Kong. Hence Shanghai-Hong Kong Stock Connect will not be open for trading SSE Securities on 2 April 2015.
b. There will not be any money settlement for Northbound trades on 7 April 2015 as 6 April 2015 is not open for Northbound trading. However, as CCASS is open for business on 7 April, it will still process money transactions in relation to nominees’ activities with respect to SSE Securities, if any.
Quota
There is an aggregate quota of RMB 300 billion (calculated at the end of each trading day) and a daily quota RMB 13 billion (calculated on a real-time basis).
Settlement details
Settlement window
Please note that there will be two deadlines for the Programme.
- The Morning Settlement Window (see Settlement deadlines below) is only available to deliver shares from sub-custody banks to counterparties such as brokers. The delivery of shares from brokers to CBL is not allowed. Customers can use the Morning Settlement Window to do the necessary movement from CBL to the brokers for same day trading as short-selling is not allowed.
- There is no restriction for the Afternoon Settlement Window (see Settlement deadlines below). Customers will be able to move the Chinese A-shares in either direction between CBL and their brokers.
The deadlines shown below are valid provided that the customer's instructions are complete, accurate and eligible for straight-through processing (STP) in CBL and in the local market. Customers must also ensure that any necessary provision is available. If any of these criteria are not met, CBL cannot guarantee timely settlement.
Settlement Deadlines for all Chinese A-shares (CET)
17 November 2014 - 28 March 2015
| Instruction | Provisioning | Deadline for receipt of valid instruction | Expected settlement results | ||||
| start | end | from | to | value | |||
| AP=Against payment FOP=Free of payment SD=Settlement date | |||||||
Instruction morning settlement window Chinese A-Shares moving from CBL to brokers and custodians | |||||||
| Deliveries | FOP | 20:00 SD-2 | 22:00 SD-1 | 22:00 SD-1 | 22:00 SD-1 | 01:45 SD | |
Instruction afternoon settlement window Chinese A-Shares moving between brokers and custodians | |||||||
| Receipts | FOP | 20:00 SD-2 | 06:55 SD | 06:55 SD | 06:55 SD | 13:45 SD | |
| Deliveries | FOP | 20:00 SD-2 | 06:55 SD | 06:55 SD | 06:55 SD | 13:45 SD | |
Settlement Deadlines for all Chinese A-shares (local time)
| Instruction | Provisioning | Deadline for receipt of valid instruction | Expected settlement results | ||||
| start | end | from | to | value | |||
| AP=Against payment FOP=Free of payment SD=Settlement date | |||||||
Instruction morning settlement window Chinese A-Shares moving from CBL to brokers and custodians | |||||||
| Deliveries | FOP | 03:00 SD-1 | 05:00 SD | 05:00 SD | 05:00 SD | 08:45 SD | |
Instruction afternoon settlement window Chinese A-Shares moving between brokers and custodians | |||||||
| Receipts | FOP | 03:00 SD-1 | 13:55 SD | 13:55 SD | 13:55 SD | 20:45 SD | |
| Deliveries | FOP | 03:00 SD-1 | 13:55 SD | 13:55 SD | 13:55 SD | 20:45 SD | |
Corporate actions
HKSCC will advise CCASS participants of all general functions. Investors in SSE securities, via the Programme will not be able to attend meetings as a proxy.
Further information
More details will be available in the Creation Link Guide, the Market Profile and Disclosure Requirements for the Hong Kong market at launch on the Clearstream website.
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF), and 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 (CBL).
2. For more information visit the website here.