Eligible Exchange-Traded Funds (ETFs) by Mainland and Hong Kong Exchanges Shall Be Included in Stock Connect
ISSUING AUTHORITIES:
China Securities Regulatory Commission
Hong Kong Securities and Futures Commission
DATE OF ISSUANCE:
May 27, 2022
A Joint Announcement of the China Securities Regulatory Commission and the Hong Kong Securities and Futures Commission (the “Joint Announcement”) was promulgated on May 27, 2022. The Joint Announcement stated that to further enhance mutual stock market access between the Mainland and Hong Kong (Stock Connect), the China Securities Regulatory Commission (CSRC) and the Hong Kong Securities and Futures Commission (SFC) agreed in principle to the inclusion of eligible exchange-traded funds (ETFs) by Mainland and Hong Kong exchanges in Stock Connect.
Pursuant to the Joint Announcement, after the inclusion of ETFs in Stock Connect, Mainland and Hong Kong investors may trade eligible stocks and ETFs listed on each other’s exchanges through local securities firms or brokers.
The principal arrangements for the inclusion of ETFs are made with reference to those under Stock Connect and follow existing fund operations, as well as the laws, regulations and operational models governing trading and clearing in the two markets. Other arrangements are set out below:
● Eligible ETFs - Detailed eligibility criteria shall include various factors such as the fund size and whether the index tracked by the fund comprises mainly eligible stocks under Stock Connect, and will be published by the Mainland and Hong Kong exchanges. With the agreement of the CSRC and SFC, Mainland and Hong Kong exchanges may adjust the scope of eligible ETFs in light of operational performance.
●Means of investment - Under Stock Connect, investors may trade ETFs only on secondary markets and no subscriptions or redemptions are allowed.
● Investment quota -The investment quota for ETFs and stocks will be aggregated for calculation and administrative purposes.
ETFs will be officially included in Stock Connect only after the trading and clearing rules and systems have been finalized, all regulatory approvals have been granted, market participants have sufficiently adapted their operational and technical systems, all necessary arrangements for cross-boundary regulatory and enforcement cooperation have been put in place, and investor education measures have been determined. According to the CSRC and SFC, formal implementation should take place approximately two months after the date of the Joint Announcement.
Reference:
《中国证券监督管理委员会、香港证券及期货事务监察委员会联合公告》
