Joint Announcement of the China Securities Regulatory Commission and the Hong Kong Securities and Futures Commission
【字号： 大 中 小】
To further deepen mutual stock market access between the Mainland and Hong Kong (Stock Connect) and promote the development of both capital markets, the China Securities Regulatory Commission (CSRC) and the Hong Kong Securities and Futures Commission (SFC) agree in principle to the inclusion of eligible exchange-traded funds (ETFs) by Mainland and Hong Kong exchanges in Stock Connect. It is hereby announced that:
1. To expand the variety of traded products and provide more investment opportunities and convenience for domestic and overseas investors, the CSRC and the SFC reached a consensus to include ETFs as eligible securities under Stock Connect in 2016. In December 2021, the Shanghai Stock Exchange, Shenzhen Stock Exchange, Stock Exchange of Hong Kong Limited, China Securities Depository and Clearing Corporation Limited and Hong Kong Securities Clearing Company Limited reached an agreement on an overall proposal to achieve this.
2. After including 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.
3. ETFs are included in Stock Connect by virtue of connections between the infrastructures supporting the mutual market access scheme. The principal arrangements for the regime 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:
(i) Eligible ETFs. The eligibility of Mainland and Hong Kong ETFs will be determined based on various factors such as the fund size and whether the index tracked by the fund comprises mainly eligible stocks under Stock Connect. Detailed eligibility criteria 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 under the Stock Connect framework in light of operational performance.
(ii) Means of investment. Under Stock Connect, investors may trade ETFs only on secondary markets and no subscriptions or redemptions are allowed.
(iii) Investment quota. The investment quota for ETFs and stocks will be aggregated for calculation and administrative purposes.
4. Other issues which are not mentioned in this joint announcement shall be dealt with in accordance with the requirements set out in the joint announcements on Stock Connect. These include the applicable trading and clearing rules, investor eligibility, cross-boundary regulatory and enforcement cooperation and liaison mechanisms.
Stock exchanges and securities registration and clearing houses on the Mainland and in Hong Kong will formulate or amend the related rules and actively carry out preparation work such as the development and testing of technical systems and investor education. ETFs will be officially included in Stock Connect only after the trading and clearing rules and systems have been finalised, 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. It will take about two months from the date of this joint announcement to prepare for formal implementation. A separate announcement will be made about the official launch date in due course.