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SZ-HK Stock Connect

The Securities and Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) have approved the launch of Shenzhen-Hong Kong Stock Connect after finalizing all necessary regulatory approvals and technological required for its commencement. Under the joint announcement issued by the SFC and the CSRC, trading through Shenzhen-Hong Kong Stock Connect commenced on 5 December 2016.The expanded trading link further strengthen mutual access between the Mainland and Hong Kong stock markets. Comparing with the QDII, QFII and RQFII programs, Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect include an expansion of cross-boundary regulatory cooperation and welcome more investors directly join into the cross-boundary investment, and improve fund liquidity.

Quota

Shenzhen-Hong Kong Stock Connect daily quota is the same with Shanghai-Hong Kong Stock Connect, 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.

The Northbound daily quota is set at RMB 13 billion, and the southbound daily quota is set at RMB 10.5 billion .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.

Qualifying Stocks

Shenzhen-Hong Kong Stock Connect constituents of shares of SZSE Component Index, SZSE Small/Mid Cap Innovation Index (market capitalisation at least RMB 6 billion), and A shares of SZSE-SEHK A+H shares.

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.

Hong Kong and overseas investors will be required to pay the following taxes and fees from Shenzhen Stock Exchange, China Clearing, Hong Kong Clearing or Mainland authorities upon trading of Shenzhen Stock Exchange through Shenzhen Stock Exchange and the settlement transaction:

Item Rate Charged by
Handing Fee 0.00487%of the consideration of a transaction per side Shenzhen Stock Exchange
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: The current CCASS charges are still applicable to the shares of SZTT, including the settlement of the shares in connection with the settlement instructions and the settlement fees. In addition, HKSCC provides custodian and proxy services, and holds CCASS shares on behalf of its CCASS Participants and collects "Portfolio Fee".The Portfolio Fee is charged in Hong Kong Dollars (HKD) on a monthly basis to each CCASS Participant in a single combination of its shares. Charges and arrangements for different market participants may also vary. As long as the SFC approves, the charging arrangements can be changed.

The State Administration of Taxation ("SAT") will apply to the Shenzhen Stock Exchange for the tax on the Shenzhen Stock Exchange, including the stamp duty and the dividend. The Hong Kong Exchanges and Clearing Limited will consult with the State Administration of Taxation on other taxes (if applicable) provided by the State Administration of Taxation.

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