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Shenzhen-Hong Kong Stock Connect Finally Launches on 5 December 2016

On 25 November 2016, the Securities and Futures Commission of Hong Kong ("SFC") and the China Securities Regulatory Commission ("CSRC") announced that the Shenzhen-Hong Kong Stock Connect ("SZ-HK Stock Connect") would formally commence trading on 5 December 2016.  This follows their grant of the approval in principle of the SZ-HK Stock Connect on 16 August 2016.

Similar to the Shanghai-Hong Kong Stock Connect ("SH-HK Stock Connect"), the SZ-HK Stock Connect allows eligible investors to trade shares listed in the Shenzhen Stock Exchange and The Stock Exchange of Hong Kong.

In a joint statement issued by the SFC and the CSRC, the regulators indicated that the trading, clearing, regulatory, operational, and other relevant rules and arrangements to operate the SH-HK Stock Connect were in place.

Additionally, the SFC and the CSRC also entered into a memorandum of understanding to strengthen and expand cross-boundary regulatory and enforcement cooperation which applies to both the SZ-HK Stock Connect and the SH-HK Stock Connect and supersedes the previous memorandum of understanding that applied only to the SH-HK Stock Connect.

Also, arrangements and procedures for cross-boundary liaising and cooperation such as measures to facilitate real-time surveillance by the SFC and the CSRC of activity in their respective markets under the programme, as well as resources for investor education relating to the SZ-HK Stock Connect have been established.

Market participants and investors should familiarise themselves with the applicable regulatory requirements of the SZ-HK Stock Connect and be aware of the differences between the trading environment in Shenzhen and in Hong Kong.  Funds and funds managers that are contemplating to invest in the PRC through SZ-HK Stock Connect should ensure appropriate disclosures are included in their documents.

Copyright 2020 K & L GatesNational Law Review, Volume VI, Number 336


About this Author

Choo Lye Tan, KL Gates Law Firm, Corporate Business Attorney

Ms. Tan is a partner in the firm’s Hong Kong office. She practices in the areas of securities, corporate finance, restructuring, mergers and acquisitions, funds and public and private equity issues. Prior to joining K&L Gates, Ms. Tan practiced in international law firms based in Malaysia and Hong Kong, advising her clients on general corporate issues in relation to the laws of Malaysia, Bermuda, the British Virgin Islands, the Cayman Islands and Hong Kong. As a result of her background in offshore and Asian laws, she frequently advises on cross-border transactions,...

Michael P. Wong, KL Gates, Investment Banks Lawyer, Private Equity Attorney

Mr. Wong is a partner in our Hong Kong office, and he concentrates his practice in investment management and financial services. He has extensive experience advising on the formation and distribution of all types of investment funds, including hedge funds, private equity funds and retail funds. Mr. Wong also regularly advises on the setting up of fund managers and other financial intermediaries and ongoing regulatory compliance work. His clients include international and PRC asset managers, private banks, investment banks and insurance companies.