What is Shanghai Connect / Shenzhen Connect?

Shanghai Connect and Shenzhen Connect are securities trading and clearing links programs to be developed by Hong Kong Exchanges and Clearing Limited (“HKEx”), Shanghai Stock Exchanges (“SSE”), Shenzhen Stock Exchanges (“SZSE”) and China Securities Depository and Clearing Corporation Limited (“ChinaClear”), aiming to achieve a breakthrough in mutual market access between the Mainland China and Hong Kong.

Under this program, Hong Kong and overseas investors will be allowed to trade eligible SSE Securities and SZSE Securities through Northbound Trading of Shanghai Connect and Shenzhen Connect.

Please refer to the diagram below for Northbound order flow.

Eligible SSE Securities

1. All constituent stocks of the SSE 180 Index;
2. All constituent stocks of the SSE 380 Index, and
3. All the SSE-listed A shares that are not included as constituent stocks of relevant indices but which have corresponding H shares listed on The Stock Exchange of Hong Kong (“SEHK”), except SSE-listed shares which are not traded in RMB; and SSE-listed shares which are included in the “risk alert board”.
4. Shares that are listed on the STAR Market and will be limited to institutional professional investors. (Fubon Bank does not provide STAR Market trading in this initial stage).

Eligible SZSE Securities

1. All constituent stocks of the SZSE Component Index;
2. All constituent stocks of the SZSE Small/Mid Cap Innovation Index which have a market capitalization of not less than RMB 6 billion;
3. All the SZSE-listed A shares which have corresponding H shares listed on SEHK, except shares which are not traded in RMB and shares which are under risk alert or under delisting arrangement; and
4. Shares that are listed on the ChiNext Board and will be limited to institutional professional investors. (Fubon Bank does not provide ChiNext Board trading in this initial stage).

Please refer to the website of HKEx, www.hkex.com.hk, for the list of eligible SSE securities / SZSE securities. (The list will be updated from time to time).

Daily Quota

Trading SSE Securities / SZSE Securities under Northbound Trading of Shanghai Connect and Shenzhen Connect will be subjected to a Daily Quota.

The Daily Quota will apply on a “net buy” basis. Under that principle, investors will be allowed to sell their cross-boundary securities regardless of the quota balance.

SSE/SZSE Trading Hours

Trading and Settlement Currency

For Northbound transactions, investors will trade and settle SSE securities / SZSE Securities in RMB only.

Clearing and Settlement Cycle

Northbound trades will follow the A share settlement cycle. Securities are settled on Trade day (“T day”) while money settlement will be effected on T+1 day.

Trading Arrangement

Investors will only be allowed to trade via Northbound trading service when both markets are open for trading, and banking services are available in both markets on the corresponding settlement days.

If it is a half trading day in Hong Kong market, Northbound trading will continue until SSE/SZSE markets are closed.

Below is an illustration for trading arrangement for SSE Securities/SZSE Securities.

For more details on trading calendar and severe weather condition, please refer to website of HKEx (www.hkex.com.hk).

Difference on Key Trading Features between SSE Securities / SZSE Securities and Hong Kong Securities

Fee Schedule

Foreign Shareholding Restrictions

Foreign investors who trade A shares are required to comply with the following foreign shareholding restrictions:

Foreign investors mean investors who trade A shares through QFII, RQFII and Shanghai Connect / Shenzhen Connect. When the aggregate foreign shareholding of an individual A share reaches 26%, SSE / SZSE will publish notices on its website. If aggregate foreign shareholding exceeds the 30% threshold, the foreign investors concerned will be requested to sell the shares on a last-in-first-out basis within five trading days.

Once SSE / SZSE informs SEHK that the aggregate foreign shareholding of an A share reaches 28%, SEHK will stop accepting further buy orders on that A share, until the aggregate shareholding lowers to 26%. If the aggregate foreign shareholding exceeds 30% and the excess is due to Shanghai Connect / Shenzhen Connect, SEHK will identify the relevant exchange participant (EP) and require it to follow the force-sell requirements.

Disclosure Obligations

Under the current Law of the PRC on Securities, when a Customer holds or controls up to 5% of the issued shares of a Mainland listed company, he / she / it is required to report in writing to the China Securities Regulatory Commission and the relevant exchange, and inform the listed company within three working days. The Customer is not allowed to trade the shares in that listed company during the three business days.

Every time when there is a change in the Customer’s shareholding by 5%, he / she / it is required to make the same disclosure within three working days. From the day the disclosure obligation arises to two working days after the disclosure is made, the Customer may not trade the shares in the relevant Securities.

If a change in shareholding of the Customer is less than 5% but results in the shares held or controlled by him falling below 5% of the relevant Mainland listed company, he / she / it is required to disclose the information within three working days.

The Customer is advised to obtain professional advice if he / she / it has any question on disclosure obligation.

Investor Compensation Fund

Effective from 1 Jan 2020, the Investor Compensation Fund (“ICF”) also covers investors' losses in relation to securities traded on the SSE or SZSE and in respect of which an order for sale or purchase is permitted to be routed through the northbound link of a Stock Connect arrangement (for defaults occurring on or after 1 January 2020).

Source: HKEx

FAQ

List of Service Charges