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Hong Kong Provides Update On Shanghai-HK Stock Connect

by Mary Swire, Lowtax.net, Hong Kong
24 October, 2014

In reply to a question in the Legislative Council, Hong Kong's Secretary for Financial Services and the Treasury, K C Chan, confirmed that the Shanghai-Hong Kong Stock Connect program will be implemented and expanded in a progressive and risk-controlled manner.

Announced on April 10 this year, SHKSC will for the first time allow eligible Mainland Chinese investors to trade stocks listed on The Stock Exchange of Hong Kong Limited (SEHK) directly through the Shanghai Stock Exchange (SSE). It will also newly enable Hong Kong and overseas investors to trade stocks listed on the SSE directly through the SEHK.

In his reply, Chan told legislators that, as a pilot program, SHKSC is a major attempt to open up the Mainland's capital markets, and will include restrictions on eligible shares, eligible investors, and quotas during the initial phase.

However, he disclosed that these restrictions may be adjusted in future. The Government, the regulatory authorities, and Hong Kong Securities Clearing Company Limited will continue to closely monitor market needs, accumulate experience through the implementation of SHKSC, and discuss enhancement and expansion arrangements with the market and the relevant Mainland authorities in a step-by-step manner, he said.

Chan said that, while derivatives are currently outside the current scope of the program, stock exchange operators in Hong Kong and Shanghai will strengthen co-operation in the development of cross-boundary derivative products based on investor demands after SHKSC's launch.

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