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Under the guidance of China Securities Regulatory Commission (CSRC), Shanghai Stock Exchange (SSE) recently issued the Implementation Rules of Shanghai Stock Exchange on Program Trading Regulation (hereinafter referred to as the "Implementation Rules"), and is soliciting comments on supporting business rules. The rule package is formulated to fully implement the spirit of the Third Plenary Session of the 20th Central Committee of the Communist Party of China, the spirit of the Central Financial Work Conference, and the requirements of Several Opinions on Strengthening Supervision, Preventing Risks and Promoting High-Quality Development of the Capital Market and regulatory requirements of the CSRC's Administrative Rules for Program Trading in the Securities Market (Trial) (hereinafter referred to as the "Administrative Rules"). It aims to foster comprehensive and strict oversight of program trading, promote its development in a regulated manner, maintain order and fairness of the securities trading market, and protect the legitimate rights and interests of investors.
The Implementation Rules is released to ensure effective implementation of the Administrative Rules
The Implementation Rules focuses on strengthening regulation, preventing risks, and promoting high-quality development. It adheres to the regulatory goal of "seeking benefits and avoiding harm, highlighting fairness, strict regulation, and regulated development". The document makes detailed provisions for program trading reporting management, trading behavior management, information system management, high-frequency trading management, Northbound Stock Connect management, supervision and inspection, etc. It highlights the fairness of the system, and ensures effective implementation of the Administrative Rules.
Previously, the SSE solicited opinions from the public on the Implementation Rules and fully listened to the opinions and suggestions of domestic and foreign investors and market institutions through symposiums and surveys. All parties generally supported it and believed that the Implementation Rules responds to market concerns and will promote the regulated development of program trading. Among the opinions and suggestions collected, some have been adopted and the expression of the provisions has been amended accordingly; others are questions related to understanding of specific provisions and processes, and the SSE will hold training sessions in a timely manner to introduce the rules.
Northbound Stock Connect investor reporting arrangements are made to ensure consistency between domestic and foreign capital
In order to refine and clarify Northbound Stock Connect investor reporting arrangements, in line with the principle of consistency between domestic and foreign capital, after thorough communication with the Stock Exchange of Hong Kong Limited, the SSE drafted the Guidelines No. 2 on the Application of Securities Trading Rules of the Shanghai Stock Exchange—Northbound Stock Connect Investor Program Trading Reporting (Draft for Comments) (hereinafter referred to as the "Reporting Guidelines") and is seeking comments from the market.
The Reporting Guidelines is generally consistent with the relevant provisions of existing program trading reporting in he Chinese Mainland. In addition, it takes into account the actual market differences between the Chinese mainland and Hong Kong SAR, make adaptive adjustments to some clauses and filling fields, and reserve sufficient preparation time for the market. When it comes to reporting entities, the reports are made based on the Broker-to-Client Assigned Number (BCAN). Regarding the reporting path, northbound investors report to participants of the Stock Exchange of Hong Kong Limited, who then relay the information to the SSE. The content of the reports and regulatory requirements are generally aligned with those in the Chinese mainland. If entities fail to meet the requirements for reporting or updating reports, or if the information reported is incomplete, the SSE may request the Stock Exchange of Hong Kong Limited to take self-regulatory measures. Going forward, the SSE will diligently gather and assess feedback for improving and releasing the Reporting Guidelines.
The SSE will continue to draw from market practices to refine regulatory arrangements related to program trading, with a view to ensuring the protection of investors' rights while promoting the healthy and stable operation of the capital market.
