On June 28, the China Securities Regulatory Commission and the Hong Kong Securities Regulatory Commission decided to approve the two exchanges to formally include eligible exchange-traded funds (exchange-traded funds, collectively referred to as "ETF") into the mainland and Hong Kong stock markets. Interconnection Mechanism (referred to as "Interconnection").ETF trading under the Connect will begin on July 4, 2022.
On the evening of the same day, the list of the first batch of underlying ETFs was released.Among them, there are 53 ETFs for Shanghai Stock Connect, 30 ETFs for Shenzhen Stock Connect, and 4 ETFs for Hong Kong Stock Connect.
Continuously optimize and improve the interconnection mechanism
According to the announcement of the China Securities Regulatory Commission and the Hong Kong Securities Regulatory Commission, since the China Securities Regulatory Commission and the Hong Kong Securities Regulatory Commission issued a joint announcement on May 27 this year, the regulators of the two places have worked together on the preparation for the inclusion of ETFs in the interconnection.At present, relevant business rules, operational plans and regulatory arrangements have been determined, and the technical system is ready.
The China Securities Regulatory Commission and the Hong Kong Securities Regulatory Commission have reached consensus on arrangements for cross-border regulatory cooperation and investor education cooperation related to the inclusion of ETFs in China Connect. , crack down on all kinds of cross-border violations of laws and regulations, promptly and properly handle major or emergencies, maintain the normal operation order of interconnection, and protect the legitimate rights and interests of investors.
Exchanges, securities trading service companies, and registration and clearing institutions in the two places shall perform various interconnection responsibilities in accordance with the law, and organize all parties in the market to carry out the business related to the incorporation of ETFs into interconnection in an orderly manner.Securities companies (or brokers) shall abide by relevant regulatory provisions and business rules, strengthen internal controls, prevent and control risks, provide investor education and services, and effectively safeguard the legitimate rights and interests of investors.Investors should fully understand the differences in laws and regulations, business rules and practical operations between the two markets, prudently assess and control risks, and rationally carry out interconnection-related investments.
In recent years, the CSRC has promoted the interconnection of financial markets and financial infrastructure between the Mainland and Hong Kong in an orderly manner. On November 17, 2014 and December 5, 2016, the China Securities Regulatory Commission launched the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect mechanisms, creating a convenient, convenient, A new model of cross-border investment with controllable risks.Since the opening of Shanghai-Shenzhen-Hong Kong Stock Connect, the overall operation has been stable and orderly. The CSRC has continued to optimize and improve various systems such as trading, settlement, and supervision of Shanghai-Shenzhen-Hong Kong Stock Connect, expand the daily quota of Shanghai-Shenzhen-Hong Kong Stock Connect, and promote north-south "see-through" supervision. The shares of companies with weighted voting rights, biotech companies listed in Hong Kong, and companies on the Science and Technology Innovation Board have been included as targets, so as to promote the high-level opening of the mainland capital market to the outside world and promote the common development of the two markets.In addition, the CSRC has improved the system in optimizing the trading suspension mechanism, reforming the late trading mechanism, and improving the management method of the shareholding limit, and achieved positive results.As of the end of May this year, the total net inflow of funds from Shanghai and Shenzhen Stock Connect was about 1,633.4 billion yuan, and the total net inflow of funds from Hong Kong Stock Connect was about 2,009.8 billion yuan.
The SFC stated that in the next step, it will continue to optimize and improve the interconnection mechanism, further expand the subject matter of interconnection transactions, effectively strengthen cross-border regulatory cooperation, support Hong Kong's status as an international financial center, and promote mutual benefit and common development of the two markets.
Clarify relevant arrangements for business implementation rules
In the early stage, the Shanghai and Shenzhen Stock Exchanges have issued relevant business rules, clarifying the conditions for ETF inclusion, adjustment mechanisms, trading arrangements and other matters.At the same time, in order to ensure market readiness, the SSE has organized market participants to further prepare for business launch, conducted multiple customs clearance tests with member institutions, and urged members to strengthen internal control and risk prevention.At present, the preparations for the incorporation of the ETF into the interconnection mechanism, including business and technology, have been basically completed.
SZSE closely cooperates with relevant parties, organizes market participants to do various preparatory work, jointly conducts multiple technical system tests with member institutions, urges members to strengthen business risk prevention, and conscientiously provide investor education services.At present, preparations for business, technology and market are basically ready.
On the 28th, the Shanghai and Shenzhen Stock Exchanges announced the list of 4 ETFs eligible for inclusion in Hong Kong Stock Connect.
The Hong Kong Stock Exchange announced the initial list of northbound eligible ETFs, including 53 ETFs for Shanghai Stock Connect and 30 ETFs for Shenzhen Stock Connect.Shanghai Stock Connect ETFs cover core broad-based products such as 50ETF, 180ETF, and 300ETF, as well as representative industry-themed products such as biomedicine, semiconductors, and new energy.Shenzhen Stock Connect ETFs cover core broad-based products such as GEM ETFs and CSI 300 ETFs, as well as representative industry-themed products such as biotechnology ETFs, chip ETFs, and carbon neutral ETFs.
