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Q: When can the investors intending to participate in trading stocks on the sci-tech innovation board file the trading application?
A: On March 1, the Shanghai Stock Exchange (SSE) officially announced the "Special Provisions of the Shanghai Stock Exchange on Trading Stocks on the Sci-tech Innovation Board" (the "Special Trading Provisions" for short), which provides the specific requirements for individual investors to trade on the sci-tech innovation board. The way of authorization for trading stocks on the sci-tech innovation board is largely the same as that of the South-bound Investment Channel of the Shanghai-Hong Kong Stock Connect. Investors who meet the suitability requirements for the stocks on the sci-tech innovation board can apply for the relevant authorization from now on. The investors may only submit trading applications to the securities companies they entrust and have the trading privileges of Sci-tech Innovation Board shares added to their existing SSE A-shares securities accounts. There’s no need to open a new securities account with China Securities Depository and Clearing Corporation Limited (CSDC). Nor are members required to apply to the SSE for other matters.
Q: What are the criteria for evaluating whether an individual investor meets the investor suitability requirements stipulated in the “Special Trading Provisions”?
A: The individual investors participating in the stock trading on the sci-tech innovation board shall meet the suitability requirements stipulated in the “Special Trading Provisions”, and the specific criteria for evaluating whether a individual investor meets the investor suitability requirements are as follows:
(I) Evaluation of assets in the investor’s securities account and fund account
1. The securities accounts that can be used in calculating the assets of an individual investor shall be opened with CSDC or at a securities company. Eligible accounts opened with CSDC include A-shares accounts, B-shares accounts, closed-end fund accounts, open-end fund accounts, derivatives contract accounts and other securities accounts offered by CSDC as the businesses require.
The fund accounts that can be used in calculating an investor’s assets include the client’s transaction settlement fund account, stock option margin account, etc.
2. The following assets in the securities accounts opened with CSDC can be calculated as an investor's assets: stocks, including A shares, B shares, preferred shares, HKEX-listed stocks purchased through the South-bound Investment Channel of the Shanghai-Hong Kong Stock Connect and stocks listed on the National Equities Exchange and Quotations (NEEQ); units of publicly offered funds; bonds; asset-backed securities; units of asset management plans; stock option contracts, in which assets shall be increased for long position contracts and decreased for short position contracts in calculation; and other securities assets recognized by the SSE.
3. The following assets in an investor's account opened at a securities company shall be included in the investor’s assets: units of publicly offered funds, units of privately offered funds, wealth management products offered by banks, precious metals, etc.
4. The following assets in an investor’s fund account shall be included in an investor's assets: the transaction settlement funds in the transaction settlement fund account; the transaction settlement funds in the stock option margin account, including the margins for the short positions; and other capital assets recognized by the SSE.
5. The net assets shall be used in calculating the financing-related assets, with the borrowed securities and funds being excluded.
(II) Evaluation of an investor’s experience in participating in securities trading
Individual investors’ participation in the trading of A shares, B shares and stocks listed on the NEEQ may all be counted as participating in the securities trading. The history of an investor’s participation in trading begins with the first transaction in any of the securities accounts under the investor’s own “Yimatong (all-in-one code)” system on the SSE, the Shenzhen Stock Exchange (SZSE) or the NEEQ. Investors may request the date of their first transaction from CSDC through securities companies.
The institutional investors who meet the requirements of the laws, regulations and the SSE’s business rules may directly apply for the authorization for trading stocks on the sci-tech innovation board and do not need to meet the above-mentioned conditions of assets and trading experience.
When authorizing an investor to trade stocks on the sci-tech innovation board, the member shall request the client who is going to place the first buy orders on the board to sign the risk disclosure letter on trading stocks on the board in written or electronic form. The risk disclosure letter shall include the contents stipulated in the “Essential Terms of the Shanghai Stock Exchange Risk Disclosure Letter on Trading Stocks on the Sci-tech Innovation Board” and fully reveal the features of the main risks of the sci-tech innovation board.
Going forward, the SSE will also publish the business guidelines for brokerage business, including the investor suitability management.
Q: Can you brief us on the progress made in preparing for the trading of the stocks on the sci-tech innovation board?
A: The SSE is making every effort to launch the sci-tech innovation board and pilot the registration-based IPO system as soon as possible. We are speeding up the development and testing of the technical system, and will organize market-wide tests later. Investors have enough time to complete the procedures to obtain the authorization for trading on the sci-tech innovation board, and may consult the securities companies where their accounts are opened about specific matters. Before obtaining the authorization and engaging in trading, investors shall carefully read relevant provisions in related laws and regulations and the SSE’s business rules, fully understand the risks, and participate in trading in a rational manner.
