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In order to implement the Provisions on the Supervision and Administration of Depositary Receipts under the Stock Connect Scheme between Domestic and Overseas Stock Exchanges (Draft Proposal for Public Consultation) released by China Securities Regulation Commission (“Provisions”), Shenzhen Stock Exchange (“SZSE”) started soliciting opinions on its newly enacted supporting rules for depositary receipts business on 24th December 2021 to make all preparations for the smooth launch of the new business.
These supporting rules include one set of “Measures” and three sets of “Guidelines”, i.e., the Interim Measures for the Listing and Trading of Depositary Receipts under the Stock Connect Scheme between Shenzhen Stock Exchange and Overseas Stock Exchanges (Draft Proposal for Public Consultation), the Guidelines for Preliminary Review of the Listing of Chinese Depositary Receipts under the Stock Connect Scheme between Shenzhen Stock Exchange and Overseas Stock Exchanges (Draft Proposal for Public Consultation), the Guidelines for Cross-Border Conversion of Depositary Receipts under the Stock Connect Scheme between Shenzhen Stock Exchange and Overseas Stock Exchanges (Draft Proposal for Public Consultation) and the Guidelines for Market-Making for Chinese Depositary Receipts under the Stock Connect Scheme between Shenzhen Stock Exchange and Overseas Stock Exchanges (Draft Proposal for Public Consultation).
The four drafts cover listing, trading, cross-border conversion and ongoing supervision. Maintaining the framework of the Stock Connect Scheme between Shanghai Stock Exchange and London Stock Exchange, these draft rules are designed to optimize mechanisms offered by Provisions and reflect the characteristics of SZSE. Adaptive adjustments have been made to the supporting trading mechanism, information disclosure by overseas issuers, and preliminary review measures for CDRs under the Stock Connect Scheme between SZSE and overseas stock exchanges after activating the financing function of Chinese depositary receipts.
The deadline for consultation is 16th January 2022 (the English versions of these rules will be published on the English website of SZSE on 24th December 2021). Next, SZSE will modify and enhance the relevant draft rules based on feedback from all market participants and, after completing procedures, will officially release them to the market so as to lay a solid institutional foundation for the depositary receipt business under the Stock Connect Scheme to achieve two-way connectivity.
