Measures of the Shanghai Stock Exchange for Implementing Shanghai-Hong Kong Stock Connect Business (Revised in September 2018)
Measures of the Shanghai Stock Exchange for Implementing Shanghai-Hong Kong Stock Connect Business (Revised in September 2018)
Measures of the Shanghai Stock Exchange for Implementing Shanghai-Hong Kong Stock Connect Business (Revised in September 2018)
Shang Zheng Fa [2018] No.73
September 7, 2018
(Took effect as of September 26, 2014, revised for the first time on July 18, 2016, revised for the second time on September 30, 2016, revised for the third time on August 6, 2018 and revised for the fourth time on September 7, 2018)
Chapter I General Provisions
Article 1 The Measures of the Shanghai Stock Exchange for Implementing Shanghai-Hong Kong Stock Connect Business ("the Measures") are hereby formulated in accordance with the Several Provisions on the Interconnection Mechanism for Mainland and Hong Kong Stock Markets ("the Provisions"), Trading Rules of the Shanghai Stock Exchange ("the Rules"), Administrative Rules on Members of the Shanghai Stock Exchange ("the Administrative Rules") and other relevant rules of the Shanghai Stock Exchange ("SSE") in order to regulate the Shanghai-Hong Kong Stock Connect business, control risk and protect the legitimate rights and interests of investors.
Article 2 Investors, SSE members, the securities trading service company ("SEHK Securities Trading Service Company") established by the Stock Exchange of Hong Kong ("SEHK"), the securities trading service company ("SSE Securities Trading Service Company") established by the SSE and other market participants engaged in Shanghai-Hong Kong Stock Connect business and other relevant activities shall be governed by the Measures.
Matters related to Shanghai Stock Connect trading (excluding those related to investors' order entrustment), the order entrustment for Hong Kong Stock Connect trading, the client management of SSE members and other matters not prescribed in the Measures shall be governed by the Rules, the Administrative Rules and other relevant business rules of the SSE.
Article 3 The SSE adopts self-regulation for the trading and other relevant activities of the Shanghai-Hong Kong Stock Connect.
Chapter II Shanghai Stock Connect Trading
Section 1 SEHK Securities Trading Service Company's Participation in Shanghai Stock Connect Trading
Article 4 To participate in Shanghai Stock Connect trading, SEHK Securities Trading Service Company shall apply for the qualification as an SSE Participant and obtain a Participant Business Unit ("PBU"), and shall comply with the SSE's rules for the Participants.
SEHK Securities Trading Service Company is not a SSE Member and is not entitled to the SSE members' rights under laws, regulations, rules, normative documents, the Constitution of the Shanghai Stock Exchange and the Administrative Rules.
Article 5 SEHK Securities Trading Service Company shall submit the following documents to apply to be an SSE Participant:
1. The Application Form and Letter of Commitment;
2. The approval documents issued by the CSRC and the Hong Kong Securities and Futures Commission ("SFC");
3. The business entity license;
4. The articles of association/incorporation;
5. The management system and technology arrangement for the Shanghai Stock Connect, and the arrangement of entrusting the SEHK to take certain responsibilities in respect of Shanghai Stock Connect trading;
6. Profiles of directors, supervisors and senior executives;
7. The Letter of Commitment, technology standards and other requirements for SEHK Participants to participate in Shanghai Stock Connect trading;
8. The settlement agreement for Shanghai Stock Connect trading between SEHK Securities Trading Service Company and Hong Kong Securities Clearing Company Limited ("HKSCC");
9. The list of SEHK Participants who plan to participate in Shanghai Stock Connect trading, and the statements that the above Participants satisfy the technology standards and other requirements;
10. The fee structure and collection method for Shanghai Stock Connect trading;
11. Other documents required by the SSE.
Article 6 SEHK Securities Trading Service Company shall route investors' orders placed with SEHK Participants to the SSE, and take the responsibilities related to Shanghai Stock Connect trading.
After the orders for Shanghai Stock Connect trading are executed in the SSE, SEHK Securities Trading Service Company shall acknowledge the trading results, accept the trading returns and send the returns to relevant SEHK Participants and HKSCC.
SEHK Securities Trading Service Company shall manage the trading activities of SEHK Participants in respect of Shanghai Stock Connect trading, and take necessary measures to deal with violations of Shanghai Stock Connect trading as required by the SSE.
Article 7 SEHK Securities Trading Service Company may entrust the SEHK to perform relevant duties stipulated in the Measures, but shall still bear the responsibilities if the aforesaid duties have failed to be fulfilled sufficiently or appropriately.
Article 8 SEHK Securities Trading Service Company shall establish risk control measures for Shanghai Stock Connect trading, in order to enhance internal control and reduce business risks.
Article 9 SEHK Securities Trading Service Company shall set the technology standards and other requirements for SEHK Participants to participate in Shanghai Stock Connect trading, and conduct testing and assessment of the technology systems of those SEHK participants who plan to participate in Shanghai Stock Connect trading.
Article 10 SEHK Securities Trading Service Company shall require qualified SEHK Participants to sign the Letter of Commitment for Shanghai Stock Connect trading. The Letter of Commitment shall include but not be limited to: complying with relevant laws, regulations, rules, normative documents and business rules of Mainland China and Hong Kong; accepting and implementing the relevant requirements set by SEHK Securities Trading Service Company based on the above regulations and the agreements between the two parties, and requiring their clients to accept and implement relevant requirements through contracts or other arrangements; accepting and requiring their clients to accept through contracts or other arrangements relevant regulations on the exemption for the SSE stipulated in the Measures and other SSE business rules.
Article 11 SEHK Securities Trading Service Company shall provide necessary assistance and guidance for Shanghai Stock Connect investors and SEHK Participants to learn relevant information including laws, regulations, rules, normative documents, business rules, business processes, and fee structures and collection methods.
Article 12 SEHK Securities Trading Service Company shall comply with relevant laws, regulations, rules, normative documents and business rules of Mainland China.
SEHK Securities Trading Service Company shall, in an appropriate manner, supervise SEHK participants and require SEHK participants to supervise their clients to comply with relevant laws, regulations, rules, normative documents and business rules of Mainland China and SSE business rules, and shall require SEHK Participants to sufficiently disclose to their clients the risks of Shanghai Stock Connect trading and the risks of liability for violating the aforesaid regulations.
Article 13 Should there be any changes to the contents of the documents that SEHK Securities Trading Service Company submitted to the SSE under Article 5 of the Measures, the company shall submit renewed documents to the SSE within three trading days under Shanghai Stock Connect trading of the aforesaid changes occurring.
SEHK Securities Trading Service Company shall provide reports on the operation of Shanghai Stock Connect according to the requirements of the SSE.
Article 14 Should there be any significant event that affects or may affect the business operation of SEHK Securities Trading Service Company, the company shall immediately report to the SSE the causes, current situation, possible consequences and solutions.
Article 15 SEHK Securities Trading Service Company shall safe-keep the documents and materials generated from its performance of responsibilities stated in the Measures, and in an appropriate way require SEHK Participants to properly safe-keep their clients' materials and clients' entrustment and order records under Shanghai Stock Connect trading for a minimum period of 20 years.
Section 2 Shanghai Stock Connect Stocks
Article 16 Shanghai Stock Connect stocks include:
1. The constituent stocks of SSE 180 Index;
2. The constituent stocks of SSE 380 Index;
3. SSE-listed A shares of A H companies that are dual-listed on the SSE and the SEHK.
Stocks that have been categorized as "risk alert" by the SSE (i.e. ST, *ST and pre-delisting stocks), temporarily suspended stocks, stocks that are traded in foreign currencies (i.e. B Share) and other stocks recognized as special in the SSE's discretion shall not be included in Shanghai Stock Connect stocks.
When approved by regulatory authorities, the SSE may adjust the scope of Shanghai Stock Connect stocks.
Article 17 Due to the adjustment of constituent stocks for relevant indices, the stocks listed on the SSE but not included in Shanghai Stock Connect stocks that become subject to the first paragraph of Article 16 but not to the second paragraph of Article 16 of the Measures shall be included in Shanghai Stock Connect stocks.
The A shares of a company listed on the SEHK (as H shares) which seeks to list on the SSE (as A shares), or of a company listed on the SSE (as A shares) which seeks to list on the SEHK (as H shares), or of a company which seeks to list on the SSE (as A shares) and the SEHK (as H shares) on the same trading day can be included in Shanghai Stock Connect stocks after listing on the SSE for ten trading days and after the price stabilization period of the company's H shares.
Article 18 Due to the adjustment of constituent stocks for relevant indices, stocks which are no longer subject to the first paragraph of Article 16 or become subject to the second paragraph of Article 16 of the Measures shall be excluded from Shanghai Stock Connect stocks.
Article 19 SEHK Securities Trading Service Company shall publish the list of Shanghai Stock Connect stocks on the websites it designates, and the inclusion or exclusion of stocks shall take effect at the time published by SEHK Securities Trading Service Company.
Section 3 Special Trading Matters
Article 20 All Shanghai Stock Connect stocks are quoted and traded in Renminbi.
Article 21 The trading calendar and trading hours of Shanghai Stock Connect stocks shall be published on the website designated by SEHK Securities Trading Service Company.
Article 22 All Shanghai Stock Connect stocks are traded by way of auction, unless otherwise prescribed by the SSE.
Article 23 Shanghai Stock Connect trading orders shall be limit orders, unless otherwise prescribed by the SSE.
The limit orders for Shanghai Stock Connect trading shall include the securities account, the broker code, the securities trader client code, the securities code, buy or sell, number of shares and prices, etc.
According to the regulatory needs, the SSE may require the SEHK to provide investors' information in respect of their orders, or access investors' information about the securities trader client code from China Securities Depository and Clearing Corporation Limited (the "CSDC").
Article 24 The stocks excluded from Shanghai Stock Connect stocks under Article 18 of the Measures but are still listed on the SSE are allowed to be sold, but not to be bought, through Shanghai Stock Connect.
Article 25 The eligible stocks for margin trading and covered short selling under Shanghai Stock Connect should be among the eligible securities for margin trading and short selling in the SSE's market.
Article 26 SEHK Securities Trading Service Company shall specifically identify covered short selling orders of Shanghai Stock Connect stocks.
The order price of covered short selling shall not be lower than the latest execution price of the same stock; the order price of stocks that have not been executed on the trading day shall not be lower than the closing price of the same stock on the previous trading day.
SEHK Securities Trading Service Company shall ensure that SEHK Participants require their clients to sell at an order price the stocks borrowed for covered short selling before returning subject to the requirements in the paragraph above, except for extra stocks that need not be returned.
Article 27 The covered short selling proportion of a single Shanghai Stock Connect stock on a single Shanghai Stock Connect trading day shall not exceed 1%; the accrued covered short selling proportion of a single Shanghai Stock Connect stock for ten consecutive Shanghai Stock Connect trading days shall not exceed 5%.
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Shang Zheng Fa [2018] No.73
September 7, 2018
(Took effect as of September 26, 2014, revised for the first time on July 18, 2016, revised for the second time on September 30, 2016, revised for the third time on August 6, 2018 and revised for the fourth time on September 7, 2018)
Chapter I General Provisions
Article 1 The Measures of the Shanghai Stock Exchange for Implementing Shanghai-Hong Kong Stock Connect Business ("the Measures") are hereby formulated in accordance with the Several Provisions on the Interconnection Mechanism for Mainland and Hong Kong Stock Markets ("the Provisions"), Trading Rules of the Shanghai Stock Exchange ("the Rules"), Administrative Rules on Members of the Shanghai Stock Exchange ("the Administrative Rules") and other relevant rules of the Shanghai Stock Exchange ("SSE") in order to regulate the Shanghai-Hong Kong Stock Connect business, control risk and protect the legitimate rights and interests of investors.
Article 2 Investors, SSE members, the securities trading service company ("SEHK Securities Trading Service Company") established by the Stock Exchange of Hong Kong ("SEHK"), the securities trading service company ("SSE Securities Trading Service Company") established by the SSE and other market participants engaged in Shanghai-Hong Kong Stock Connect business and other relevant activities shall be governed by the Measures.
Matters related to Shanghai Stock Connect trading (excluding those related to investors' order entrustment), the order entrustment for Hong Kong Stock Connect trading, the client management of SSE members and other matters not prescribed in the Measures shall be governed by the Rules, the Administrative Rules and other relevant business rules of the SSE.
Article 3 The SSE adopts self-regulation for the trading and other relevant activities of the Shanghai-Hong Kong Stock Connect.
Chapter II Shanghai Stock Connect Trading
Section 1 SEHK Securities Trading Service Company's Participation in Shanghai Stock Connect Trading
Article 4 To participate in Shanghai Stock Connect trading, SEHK Securities Trading Service Company shall apply for the qualification as an SSE Participant and obtain a Participant Business Unit ("PBU"), and shall comply with the SSE's rules for the Participants.
SEHK Securities Trading Service Company is not a SSE Member and is not entitled to the SSE members' rights under laws, regulations, rules, normative documents, the Constitution of the Shanghai Stock Exchange and the Administrative Rules.
Article 5 SEHK Securities Trading Service Company shall submit the following documents to apply to be an SSE Participant:
1. The Application Form and Letter of Commitment;
2. The approval documents issued by the CSRC and the Hong Kong Securities and Futures Commission ("SFC");
3. The business entity license;
4. The articles of association/incorporation;
5. The management system and technology arrangement for the Shanghai Stock Connect, and the arrangement of entrusting the SEHK to take certain responsibilities in respect of Shanghai Stock Connect trading;
6. Profiles of directors, supervisors and senior executives;
7. The Letter of Commitment, technology standards and other requirements for SEHK Participants to participate in Shanghai Stock Connect trading;
8. The settlement agreement for Shanghai Stock Connect trading between SEHK Securities Trading Service Company and Hong Kong Securities Clearing Company Limited ("HKSCC");
9. The list of SEHK Participants who plan to participate in Shanghai Stock Connect trading, and the statements that the above Participants satisfy the technology standards and other requirements;
10. The fee structure and collection method for Shanghai Stock Connect trading;
11. Other documents required by the SSE.
Article 6 SEHK Securities Trading Service Company shall route investors' orders placed with SEHK Participants to the SSE, and take the responsibilities related to Shanghai Stock Connect trading.
After the orders for Shanghai Stock Connect trading are executed in the SSE, SEHK Securities Trading Service Company shall acknowledge the trading results, accept the trading returns and send the returns to relevant SEHK Participants and HKSCC.
SEHK Securities Trading Service Company shall manage the trading activities of SEHK Participants in respect of Shanghai Stock Connect trading, and take necessary measures to deal with violations of Shanghai Stock Connect trading as required by the SSE.
Article 7 SEHK Securities Trading Service Company may entrust the SEHK to perform relevant duties stipulated in the Measures, but shall still bear the responsibilities if the aforesaid duties have failed to be fulfilled sufficiently or appropriately.
Article 8 SEHK Securities Trading Service Company shall establish risk control measures for Shanghai Stock Connect trading, in order to enhance internal control and reduce business risks.
Article 9 SEHK Securities Trading Service Company shall set the technology standards and other requirements for SEHK Participants to participate in Shanghai Stock Connect trading, and conduct testing and assessment of the technology systems of those SEHK participants who plan to participate in Shanghai Stock Connect trading.
Article 10 SEHK Securities Trading Service Company shall require qualified SEHK Participants to sign the Letter of Commitment for Shanghai Stock Connect trading. The Letter of Commitment shall include but not be limited to: complying with relevant laws, regulations, rules, normative documents and business rules of Mainland China and Hong Kong; accepting and implementing the relevant requirements set by SEHK Securities Trading Service Company based on the above regulations and the agreements between the two parties, and requiring their clients to accept and implement relevant requirements through contracts or other arrangements; accepting and requiring their clients to accept through contracts or other arrangements relevant regulations on the exemption for the SSE stipulated in the Measures and other SSE business rules.
Article 11 SEHK Securities Trading Service Company shall provide necessary assistance and guidance for Shanghai Stock Connect investors and SEHK Participants to learn relevant information including laws, regulations, rules, normative documents, business rules, business processes, and fee structures and collection methods.
Article 12 SEHK Securities Trading Service Company shall comply with relevant laws, regulations, rules, normative documents and business rules of Mainland China.
SEHK Securities Trading Service Company shall, in an appropriate manner, supervise SEHK participants and require SEHK participants to supervise their clients to comply with relevant laws, regulations, rules, normative documents and business rules of Mainland China and SSE business rules, and shall require SEHK Participants to sufficiently disclose to their clients the risks of Shanghai Stock Connect trading and the risks of liability for violating the aforesaid regulations.
Article 13 Should there be any changes to the contents of the documents that SEHK Securities Trading Service Company submitted to the SSE under Article 5 of the Measures, the company shall submit renewed documents to the SSE within three trading days under Shanghai Stock Connect trading of the aforesaid changes occurring.
SEHK Securities Trading Service Company shall provide reports on the operation of Shanghai Stock Connect according to the requirements of the SSE.
Article 14 Should there be any significant event that affects or may affect the business operation of SEHK Securities Trading Service Company, the company shall immediately report to the SSE the causes, current situation, possible consequences and solutions.
Article 15 SEHK Securities Trading Service Company shall safe-keep the documents and materials generated from its performance of responsibilities stated in the Measures, and in an appropriate way require SEHK Participants to properly safe-keep their clients' materials and clients' entrustment and order records under Shanghai Stock Connect trading for a minimum period of 20 years.
Section 2 Shanghai Stock Connect Stocks
Article 16 Shanghai Stock Connect stocks include:
1. The constituent stocks of SSE 180 Index;
2. The constituent stocks of SSE 380 Index;
3. SSE-listed A shares of A H companies that are dual-listed on the SSE and the SEHK.
Stocks that have been categorized as "risk alert" by the SSE (i.e. ST, *ST and pre-delisting stocks), temporarily suspended stocks, stocks that are traded in foreign currencies (i.e. B Share) and other stocks recognized as special in the SSE's discretion shall not be included in Shanghai Stock Connect stocks.
When approved by regulatory authorities, the SSE may adjust the scope of Shanghai Stock Connect stocks.
Article 17 Due to the adjustment of constituent stocks for relevant indices, the stocks listed on the SSE but not included in Shanghai Stock Connect stocks that become subject to the first paragraph of Article 16 but not to the second paragraph of Article 16 of the Measures shall be included in Shanghai Stock Connect stocks.
The A shares of a company listed on the SEHK (as H shares) which seeks to list on the SSE (as A shares), or of a company listed on the SSE (as A shares) which seeks to list on the SEHK (as H shares), or of a company which seeks to list on the SSE (as A shares) and the SEHK (as H shares) on the same trading day can be included in Shanghai Stock Connect stocks after listing on the SSE for ten trading days and after the price stabilization period of the company's H shares.
Article 18 Due to the adjustment of constituent stocks for relevant indices, stocks which are no longer subject to the first paragraph of Article 16 or become subject to the second paragraph of Article 16 of the Measures shall be excluded from Shanghai Stock Connect stocks.
Article 19 SEHK Securities Trading Service Company shall publish the list of Shanghai Stock Connect stocks on the websites it designates, and the inclusion or exclusion of stocks shall take effect at the time published by SEHK Securities Trading Service Company.
Section 3 Special Trading Matters
Article 20 All Shanghai Stock Connect stocks are quoted and traded in Renminbi.
Article 21 The trading calendar and trading hours of Shanghai Stock Connect stocks shall be published on the website designated by SEHK Securities Trading Service Company.
Article 22 All Shanghai Stock Connect stocks are traded by way of auction, unless otherwise prescribed by the SSE.
Article 23 Shanghai Stock Connect trading orders shall be limit orders, unless otherwise prescribed by the SSE.
The limit orders for Shanghai Stock Connect trading shall include the securities account, the broker code, the securities trader client code, the securities code, buy or sell, number of shares and prices, etc.
According to the regulatory needs, the SSE may require the SEHK to provide investors' information in respect of their orders, or access investors' information about the securities trader client code from China Securities Depository and Clearing Corporation Limited (the "CSDC").
Article 24 The stocks excluded from Shanghai Stock Connect stocks under Article 18 of the Measures but are still listed on the SSE are allowed to be sold, but not to be bought, through Shanghai Stock Connect.
Article 25 The eligible stocks for margin trading and covered short selling under Shanghai Stock Connect should be among the eligible securities for margin trading and short selling in the SSE's market.
Article 26 SEHK Securities Trading Service Company shall specifically identify covered short selling orders of Shanghai Stock Connect stocks.
The order price of covered short selling shall not be lower than the latest execution price of the same stock; the order price of stocks that have not been executed on the trading day shall not be lower than the closing price of the same stock on the previous trading day.
SEHK Securities Trading Service Company shall ensure that SEHK Participants require their clients to sell at an order price the stocks borrowed for covered short selling before returning subject to the requirements in the paragraph above, except for extra stocks that need not be returned.
Article 27 The covered short selling proportion of a single Shanghai Stock Connect stock on a single Shanghai Stock Connect trading day shall not exceed 1%; the accrued covered short selling proportion of a single Shanghai Stock Connect stock for ten consecutive Shanghai Stock Connect trading days shall not exceed 5%.
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