Shanghai-HK Stock Connect / Shenzhen-HK Stock Connect

Discern the opportunities of Shanghai–HK Stock Connect/
Shenzhen–HK Stock Connect, amass the potential wealth

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


Under this programme, Hong Kong and overseas investors will be able to trade eligible SSE and SZSE securities through “Shanghai Northbound Trading” and "Shenzhen Northbound Trading" while Mainland investors will be able to trade eligible Hong Kong-listed securities through "Southbound Trading".


The Bank provides Shanghai Northbound Trading and Shenzhen Northbound Trading services to its customers.


For existing securities trading customer would like to engage in Shanghai and Shenzhen Northbound Trading, please visit any of our branches to activate the services. Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect are subject to relevant terms and conditions.

Important Note:
Investment involves risks. The prices of securities fluctuate, sometimes dramatically. The price of a security may move up or down, and may become valueless. It is as likely that losses will be incurred rather than profit made as a result of buying and selling securities.
Any Northbound Trading under Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect will not be covered by Hong Kong’s Investor Compensation Fund.
The shares under Shanghai and Shenzhen Northbound Trading are denominated in RMB. If your home currency is not RMB, you will be exposed to currency risk.
Due to the difference in the market operation and trading mechanism between the Shanghai Stock Exchange (“SSE”), Shenzhen Stock Exchange (“SZSE”) and the Stock Exchange of Hong Kong (“SEHK”) as well as the specific features associated with the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect (e.g. Trading Days and Daily Quota, etc), please understand the associated risks before investing.
Stock trading via Shanghai and Shenzhen Northbound Trading may be restricted or suspended when the relevant Quotas are used up or the relevant stocks cease to be the Eligible Stock.
Unlike securities trading in the SEHK, board lot and odd lot orders are both matched on the same platform in SSE and SZSE, and subject to the same share price. As such, board lot orders may be matched with odd lot orders in the SSE or SZSE, and this may result in odd lot trades in case of partial execution. In the extreme situation for sell orders where the quantity executed may be very little that the resulted transaction consideration may not be enough to cover the associated fees (e.g. brokerage commission), the customers still have to bear full payment of the associated fees.

Key facts about Shanghai Northbound Trading and Shenzhen Northbound Trading #

Shanghai Northbound Trading Shenzhen Northbound Trading
Eligible customers Individual or corporate customers who have Securities Trading (Cash) Account and RMB Settlement Account maintained with our Bank
Eligible stocks · Constituent stocks of the SSE 180 Index
· Constituent stocks of the SSE 380 Index
· All SSE listed A shares with the corresponding H shares listed and traded on SEHK
· Constituent stocks of SZSE Component Index and SZSE Small / Mid Cap Innovation Index with market
capitalization of not less than RMB 6 billion(ChiNext Board is limited to institutional professional investors)
· All SZSE listed A shares with the corresponding H shares listed and traded on SEHK
Note: Excluding stocks on risk alert board and stocks not traded in RMB
Trading Days Investors will only be allowed to trade via Shanghai Northbound Trading and Shenzhen Northbound Trading where both markets in Hong Kong and Mainland are open for trading, and banking services are available in both markets on the corresponding settlement day.
Trading Hours · Opening Call Auction 09:15 - 09:25
· Continuous Auction
09:30 – 11:30 (Morning session)
13:00 – 15:00 (Afternoon session)
· Opening Call Auction
09:15 – 09:25
· Continuous Auction
09:30 – 11:30 (Morning session)
13:00 – 14:57 (Afternoon session)
· Closing Call Auction
14:57 – 15:00
Remarks:
(1) 09:20 – 09:25: SSE will not accept order cancellation
09:20 – 09:25 & 14:57 – 15:00: SSE will not accept order cancellation
(2) 09:10 – 09:15, 09:25 – 09:30 & 12:55 – 13:00:Orders and order cancellation can be accepted by SEHK but will not be processed by SSE & SZSE until market open
(3) Orders that are not executed during the Opening Call Auction session will automatically enter the Continuous Auction session
Order Type Only Limit Order
Board lot size 100 shares per lot
(Applicable to buy orders only. Odd lot holding can only be sold in one-go. Both buy and sell orders may match with odd lot orders and may result in odd lot trades)
Max order quantity 1 million shares
Tick size RMB0.01
((Note: Please also refer to the section “Price Limit” and “Dynamic Price Checking” for further details)
Order amendment Not allowed
(Customer can only cancel the respective order and place a new order after the order successfully cancelled)
Day Trade Not allowed. Customer can only place a sell instruction when they have sufficient and available relevant securities in their account
Covered Short Selling Allowed but not available in CCBA
Margin financing, stock borrowing & lending
Buy / Sell of ChiNext Board Shares
Non-trade Transfe Allowed but subject to certain conditions (e.g. succession; divorce; the dissolution, liquidation or winding-up of any company or corporation; donation to a charitable foundation or assisting in any enforcement in connection with proceedings or action taken by any court, prosecutor or law enforcement agency; and any other transfer as may be permitted by the relevant regulatory bodies)
IPO subscription Not allowed
Settlement cycle Stock Settlement: Trade day
Cash settlement: Trade day + 1
Settlement currency RMB
Daily Quota for Shanghai and Shenzhen Northbound Trading (Calculated real-time during trading hours)
Remark: Please visit HKEx website (www.hkex.com.hk) for quota information.
RMB13 billion for each market
Daily Quota Balance = Daily Quota – Buy Orders + Sell Trades + Adjustments (e.g. Buy Order cancelled, Buy Order rejected by SSE / SZSE, Buy Order executed at a better price)
If Daily Quota balance ≤ 0:
- During Opening Call Auction Session: Reject new buy orders until quota balance becomes positive
- During Continuous Auction Session: Suspend buy order for the remaining of the day
- Buy order already input before suspension will not be affected
Protected by Investor Compensation Fund No

# Subject to change by the relevant regulators or authorities from time to time


Remarks:
For the fees and levies charged by relevant regulators or authorities in Shanghai and Shenzhen Northbound Trading (including but not limit to brokerage commission and / or other fees charged by the Bank), please refer to the latest Schedule of Service Fees for Securities Trading Service.

Holiday arrangement in Shanghai and Shenzhen Northbound Trading

The following table illustrates the holiday arrangement of Shanghai and Shenzhen Northbound Trading:


No value Hong Kong Mainland Shanghai and Shenzhen Northbound Trading
Trading
(T Day)
Money Settlement
(applicable for T-1 day’s trade)
Securities Settlement
(applicable for T days trades)
Wednesday Business Day Business Day Yes Yes Yes
Thursday Business Day Business Day No^ Yes No^
Friday Public Holiday Business Day No No No
Monday Public Holiday Business Day No No No
Tuesday Business Day Business Day Yes Yes# Yes

^ Friday is a public holiday in Hong Kong and money settlement will not be executed by CCASS on that day. Hence, Shanghai–Hong Kong Stock Connect and Shenzhen–Hong Kong Stock Connect will not be open for trading SSE or SZSE securities on Thursday.

# There will not be any money settlement for Shanghai and Shenzhen Northbound trades on Tuesday as Monday is not open for Shanghai and Shenzhen Northbound Trading. However, as CCASS is open for business on Tuesday, it will still process money transactions in relation to nominee’s activities with respect to SSE and SZSE securities, If any.


Remarks: if a Shanghai and Shenzhen Northbound trading day is a half trading day in Hong Kong market, Shanghai and Shenzhen Northbound trading will continue until the close of the Shanghai and Shenzhen stock market.


Contingency arrangement under severe weather conditions in Shanghai and Shenzhen Northbound Trading

Scenarios Shanghai and Shenzhen Northbound Trading Money Settlement
(applicable for T-1 position)
Securities Settlement
(applicable for T position)
Typhoon signal No. 8 / Black rainstorm issued before HK Market opens (i.e. before 9:00am) and discontinued after 12:00noon Not Open No N/A
Typhoon signal No. 8 issued between 9:00am - 9:15am Not Open Yes
yphoon signal No. 8 issued after SSE/SZSE market opens (i.e.9:15am) * Trading will continue for 15 minutes after T8 issuance, thereafter, only order cancellation is allowed till SSE/SZSE market close Yes Yes
Black rainstorm issued after HK market opens
(i.e. after 9:00am)/td>
Trading continues as normal Yes Yes
Typhoon signal No. 8 / Black rainstorm discontinued at or before 12:00noon Trading resumes after 2 hours Postpone to 3:00p.m.

* All outstanding orders in SSE/SZSE market will be cancelled by the Bank without prior notice when typhoon signal No. 8 is hosted. Customers should aware their orders may be executed in SSE/SZSE market before the cancellation instruction that submitted by the Bank to SSE/SZSE market during the period of typhoon signal No. 8. To avoid doubt, the Bank advises customers to cancel all outstanding orders before typhoon signal No. 8 is hosted if needed.

Under the below situations purchase orders of SSE or SZSE securities will be suspended

1.the SSE or SZSE security subsequently ceases to be a constituent stock of the relevant indices;

2.the SSE or SZSE security is subsequently under “risk alert”;

3.the corresponding H share of the SSE or SZSE security subsequently ceases to be traded on SEHK;

4.the SZSE security is, based on any subsequent periodic review, determined to have a market capitalization of less than RMB 6 billion;

5.Aggregate foreign shareholding on SSE or SZSE securities reaches 28%;

6.Daily Quota Balance drops to zero or below


ATTENTION:
After order placement in the Bank, customers are advised to check the order status from time to time via our various channels (including but not limited to Online Banking or Mobile Banking, etc) for the latest status and execution result of the order instruction placed to our Bank. Please be reminded that our acceptance to customer’s order placement does not mean that the order can be / will be executed and/or accepted by the Shanghai Stock Exchange/Shenzhen Stock Exchange.

Price Limit

For SSE and SZSE securities, there is a general price limit of a ±10% (and a ±5% for stocks under special treatment (i.e. ST and *ST stocks) in the risk alert board in SSE and SZSE) based on previous closing price. Any orders with price beyond the price limit will be rejected by SSE or SZSE. Shanghai and Shenzhen Northbound Trading is subject to the same rule.

Dynamic Price limit

To prevent mischievous behavior towards the use of the Northbound quota, SEHK has put in place a dynamic price checking for buy orders. Buy orders with input prices lower than the current best bid (or last traded price in the absence of current best bid, or previous closing price in the absence of both current best bid and last traded price) beyond a prescribed percentage will be rejected.
During Opening Call Auction, the current bid (or previous closing price in the absence of the current bid) will be used for checking. During Closing Call Auction of SZSE, the current bid (or last traded price in the absence of the current bid) will be used for checking. Dynamic price checking will be applied throughout the trading day, from the 5-minute input period before the start of Opening Call Auction until the end of the afternoon Continuous Auction (until the end of the Closing Call Auction for SZSE). SEHK has set the dynamic price checking at 3% during the initial phase and may be adjusted from time to time subject to market conditions.

Restriction on share holding for foreign investor

Under the current PRC rules, foreign investors who trade SSE or SZSE securities are required to comply with the following foreign shareholding restrictions. Northbound Trading of SSE / SZSE securities are subject to this restriction :
i. Aggregate foreign investors’ shareholding in an SSE or SZSE security cannot exceed 30% of the total issued shares
ii. Single foreign investors’ shareholding in an SSE or SZSE security cannot exceed 10% of total issued shares
Once the SSE / SZSE informs SEHK that the aggregate foreign shareholding in an SSE or SZSE security reaches 28%, HKEx will stop accepting further buy orders on that SSE or SZSE security, until shareholding lowers to 26%. If the aggregate foreign shareholding exceeds 30% and the excess is due to Shanghai / Shenzhen Northbound Trading, HKEx will identify the relevant exchange participant (EP) and require it to follow the force-sell requirements. Investor may suffer a loss due to this force-sell arrangement.

Disclosure obligations

Under the current PRC rules, when an investor holds or controls up to 5% of the issued shares of an SSE or SZSE listed company, the investor is required to disclose his /her interest within three working days. Such investor may not buy or sell the shares in the listed issuer within the three-day period. For such investor, every time when there is an increase or decrease in his shareholding by 5%, he / she is required to make a disclosure within three working days. From the day the disclosure obligation arises to two working days after the disclosure is made, the investor may not buy or sell the shares in the listed issuer. If a change in shareholding of the investor is less than 5% but results in the shares held or controlled by him / her falling below 5% of the issued shares in the listed issuer, the investor is required to disclose the information within three working days.

Investors are advised to obtain appropriate professional legal and financial advice if there is any query on disclosure obligations.

FAQ

Risk Disclosure for Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect

Disclaimer
The above information maybe amended or changed due to the change of relevant rules, regulation, requirements in connection with the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect. You are advised to observe the updates of such relevant rules, regulations and requirements from time to time. Such information does not constitute advice to buy or sell, or an offer with respect to any securities. Nor does it constitute any prediction of likely future movements in prices of any securities. The above information has not been reviewed by the Securities and Futures Commission or any other regulatory authorities in Hong Kong.

Reference Source: HKEx (Shanghai-Hong Kong Stock Connect and Shenzhen – Hong Kong Stock Connect), Investor Education Centre (www.hkiec.hk)