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SH-HK Stock Connect

Shanghai-Hong Kong Stock Connect is a securities trading and clearing links programme developed by Hong Kong Exchanges and Clearing Limited(HKEX)Shanghai Stock Exchange(SSE)and China Securities Depository and Clearing Corporation Limited(China Clear),aiming to achieve a breakthrough in mutual market access between the Mainland and Hong Kong. It formally began on 11 Jan 2014. Under Shanghai-Hong Kong Stock Connect, The Stock Exchange of Hong Kong (SEHK),a wholly-owned subsidiary of HKEX, and SSE have established mutual order-routing connectivity and related technical infrastructure to enable investors of their respective market to trade designated equity securities listed in the other’s market. The establishment of Shanghai-Hong Kong Stock Connect is a ground breaking initiative to both Mainland and Hong Kong as it has, for the first time, enabled mutual market access by investors in the two markets through an orderly, controllable and expandable channel.

Quota

Trading under Shanghai-Hong Kong Stock Connect is subject to a Daily Quota, and the maximum cross-boundary investment quota was abolished at 2016.08.16.Northbound trading and Southbound trading are respectively subject to a separate set of Aggregate and Daily Quota, which is monitored by SEHK and SSE respectively.

Both the Aggregate Quota balance will be published on HKEX website after SSE’s market close. The daily Quota balance will be disseminated on HKEX website at 1-minute intervals and through CCOG and OMD Index Feed at 5-second intervals. The Northbound daily quota is set at RMB 13 billion, and the southbound daily quota is set at RMB 10.5 billion.

Qualifying Stocks

Among the different types of SSE-listed securities, only A shares are included in Shanghai-Hong Kong Stock Connect in the initial stage. Other product types such as B shares, Exchange Traded Funds (“ETF”s), bonds, and other securities are not included.

In the initial phase, Hong Kong and overseas investors are able to trade certain stocks listed on the SSE market (i.e. “SSE Securities”).These include all the constituent stocks from time to time of the SSE 180 Index and SSE 380 Index. And H shares which have corresponding shares listed and traded on an exchange in Mainland China other than SSE.

For the list of eligible stocks, please refer to on the HKEx website. The List of Eligible Stocks which is updated from time to time.

Fees and taxes related to northbound trades under Shanghai-Hong Kong Stock Connect as follows:

Items Rate Charged by
Handing Fee 0.00487%of the consideration of a transaction per side SSE
Securities Management Fee 0.002%of the consideration of a transaction per side CSRC
Transfer Fee 0.002%of the consideration of a transaction per side China Clear/HKSCC
Stamp Duty 0.1%of the consideration of a transaction on the seller SAT

Note: All the above fees and levies will be collected from CCASS Participants’ designated bank account at day-end of T day. Hong Kong and overseas investors trading SSE Securities under Shanghai-Hong Kong Stock Connect are subject to SSE’s Handling Fee and Securities Management Fee, together with China Clear’s and HKSCC’s “Transfer Fee”

Investors should note that certain existing CCASS fees still apply, including stock settlement fee for settlement instructions and money settlement fee. HKSCC has imposed a Portfolio fee, on its CCASS Participants for providing depository and nominee services for their SSE Securities held in CCASS. The Portfolio Fee will be collected in HKD on a monthly basis.

Differences in Trading and Settlement Arrangement between Hong Kong Stocks and SSE & SZSE Securities

Item Hong Kong Stocks A Shares through Northbound Trading Link
Quota No limit Daily quota (RMB 13 Billion)
Modify/Cancel Orders Accept Not accept “modify orders”
Stock Code 5 digits 6 digits
Trading and Settlement Currency HKD RMB
Ticket Size Ranging from HK$0.001 to HK$5 depending on the stock price Uniformly set at RMB0.01
Day Trading Allowed Not allowed, shares bought on T day can only be sold on and after T+1 day
Trading Fee Trading fee, Transaction fee, Stamp duty Handling fee, Securities management fee, Transfer fee, Stamp duty
Board Lot Size Depends on the stocks 100 Shares in buying order (Buy orders must be in board lot, odd lot trading is only available for sell orders)
Odd Lot All the odd lot orders can only be traded via “odd lot brokers” and sold at the odd lot market price. The odd lot market price is usually 15 to 25 spreads lower than the prevailing board lot market price For Northbound trading, Exchange Participants are allowed to input odd lot sell orders. However, odd lot buy orders will not be accepted. In addition, an investor (or ultimate beneficial owner) who places an odd lot sell order must ensure he/she sells all the odd lot in that SSE Security in one go.
Trading at Any Time before Settlement Allowed Not allowed
Settlement Cycles Both securities and money are settled on the same day on T+2 days Securities: settled on T day
Money: settled on T+1 day

The above contents are extracted from webpage of Shanghai – Hong Kong Stock Connect and Shenzhen – Hong Kong Stock Connect, this information may be modified and changed by the launch of Shanghai – Hong Kong Stock Connect and Shenzhen – Hong Kong Stock Connect or related regulations, ordinances, agreements and other documents.

For details, please refer to the following link:

http://www.hkex.com.hk/eng/market/sec_tradinfra/chinaconnect/Documents/Investor_Book_En.pdf