Four-party agreement signed for Shanghai-HK stock connect

A four-party agreement was signed on Thursday for the establishment of Shanghai-Hong Kong Stock Connect, a scheme that will allow investors with access to one market to buy and sell eligible shares listed on the other market.

The Stock Exchange of Hong Kong Limited (SEHK) and Hong Kong Securities Clearing Company Limited (HKSCC), wholly-owned subsidiaries of Hong Kong Exchanges and Clearing Limited (HKEx), signed the agreement with the Shanghai Stock Exchange (SSE) and China Securities Depository and Clearing Corporation Limited ( ChinaClear).

Shanghai-Hong Kong Stock Connect has been developed in accordance with the principles set out in the joint announcement by Hong Kong's Securities and Futures Commission (SFC) and China Securities Regulatory Commission (CSRC) on April 10, 2014 regarding their approval, in principle, of the development of a pilot program for the establishment of mutual stock market access between mainland China and Hong Kong.

SSE Chairman Gui Minjie said,"with this agreement, we have built up a complete framework for the Shanghai-Hong Kong Stock Connect business that clarifies all rights and responsibilities of the four related parties in terms of trading, clearing, custody and market surveillance. It is a milestone marking that the two exchanges and the two clearing houses have had consensus about the market mechanism and business arrangement."

"Our next step is to consolidate the technical preparations, release business rules and further conduct system testing for the launch of the program," he added.

HKEx Chief Executive Charles Li said, "after the joint announcement by CSRC and SFC in early April, we knew we had to accomplish three important things before Shanghai-Hong Kong Stock Connect could be launched: signing a four-party framework agreement, incorporating the operating arrangements into the respective rules and getting final approvals from the regulators."

Li said, "today's signing of the Four-party Agreement indicates that we are getting closer to our goal. The agreement is the master document for the cooperation of the four parties, clearly spelling out the obligations and responsibilities of each party based on the principles set out in the joint announcement by the regulators."

According to HKEx, Shanghai-Hong Kong Stock Connect is planned to be officially launched after the relevant trading and clearing rules have been finalized, the relevant systems have been developed, all regulatory approvals have been granted, market participants have had sufficient opportunity to configure and adapt their systems, and all necessary investor education programs are in place.