To further raise the level of two-way opening-up of the Chinese mainland capital market and deepen the interconnectivity mechanism with the Hong Kong capital market, under the overall planning and communication of the securities regulatory commissions in the two capital markets, we now seek public opinions on the revision to the Implementation Measures of SZSE for Shenzhen-Hong Kong Stock Connect Business based on the consensus reached among the Shenzhen Stock Exchange (SZSE), the Shanghai Stock Exchange (SSE), the Hong Kong Exchanges and Clearing Limited (HKEX) and China Securities Depository and Clearing Corporation Limited (CSDC).
On the basis of the existing Shenzhen-Hong Kong Stock Connect mechanism, in this revision, we include qualified SZSE and SEHK ETFs into the scope of underlyings eligible for trading under the Shenzhen-Hong Kong Stock Connect. Specifically, for SZSE ETFs, their daily average assets over the past six months shall reach CNY 1.5 billion, and their constituent securities shall be mostly underlying stocks under the Shenzhen Connect and the Shanghai Connect. For SEHK ETFs, their daily average assets over the past six months shall reach HKD 1.7 billion, and the constituent securities shall be mostly the underlying stocks under the Hong Kong Stock Connect and cannot be synthetic ETFs, leveraged or reverse products. ETFs falling with the scope must meet the requirements that they shall be listed for over six months and their underlying indexes shall be on the market for more than one year after release. In principle, underlying ETFs will be adjusted semiannually. The trading mechanism, daily limit control, investor suitability management, regulatory cooperation, clearing & settlement and risk control arrangements will be basically consistent with the existing stock mechanism of the Shenzhen-Hong Kong Stock Connect. The ETFs can only be traded on the secondary market.
Including ETFs into the scope of underlyings under the Shenzhen-Hong Kong Stock Connect is an important measure to implement the guiding principles of the Central Economic Working Conference and the special meeting of the Financial Stability and Development Committee of the State Council, and another major breakthrough in the continuous efforts to deepen reform and promote high-standard opening-up. Next, SZSE will follow CSRC’s overall plan and adhere to the general principle of seeking progress while maintaining stability to see relevant business and technical preparations properly done in order to ensure steady inclusion of ETFs. We will fully support and maintain the status of Hong Kong as an international financial center, ensure the healthy and stable development of the capital markets in the Chinese mainland and Hong Kong, and better serve the development of the Guangdong-Hong Kong-Macao Greater Bay Area.
