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China Fund News Dawn

Shanghai, Shenzhen and Hong Kong Stock Exchanges officially announced big news!

On the evening of July 26, the Shanghai Stock Exchange issued the "Notice on the Adjustment of the Information Disclosure Mechanism for Shanghai-Hong Kong Stock Connect Transactions", deciding to adjust the information disclosure mechanism for Shanghai-Hong Kong Stock Connect transactions from August 19, 2024.

During the same period, the Shenzhen Stock Exchange issued the "Notice on Matters Related to the Adjustment of the Information Disclosure Mechanism for Shenzhen-Hong Kong Stock Connect Transactions" to adjust the information disclosure mechanism for Shenzhen-Hong Kong Stock Connect transactions.

According to the notice, after the adjustment, the disclosure of transaction information related to Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect and Hong Kong-Shenzhen Stock Connect shall be implemented in accordance with the following provisions:

Shanghai Stock Connect announcement:

• After the close of each Shanghai-Hong Kong Stock Connect trading day, the total transaction volume and total number of transactions of the Shanghai-Hong Kong Stock Connect, the total transaction volume of ETFs, the list of the top ten most active securities and their total transaction volume will be announced, and the summary of the above data will be announced on a monthly and annual basis.

• The total number of shares held by Shanghai-Hong Kong Stock Connect investors at the end of the previous quarter will be announced on the fifth Shanghai-Hong Kong Stock Connect trading day of each quarter.

Shenzhen Stock Connect announcement:

• After the close of each Shenzhen-Hong Kong Stock Connect trading day, the total amount and number of Shenzhen-Hong Kong Stock Connect transactions, the total amount of ETF transactions, the list of the top ten securities in terms of transaction amount and their total transaction amount will be announced, and the summary of the above data will be announced on a monthly and annual basis.

• The total number of Shenzhen-Hong Kong Stock Connect investors holding a single security at the end of the previous quarter will be announced on the fifth Shenzhen-Hong Kong Stock Connect trading day of each quarter.

Hong Kong Stock Connect announcement:

• During trading hours, when the daily quota balance of Hong Kong Stock Connect is greater than or equal to 30%, “Sufficient quota” will be displayed; when the daily quota balance is less than 30%, the quota balance will be announced in real time.

• After the close of each Hong Kong Stock Connect trading day, the day’s Hong Kong Stock Connect buy transaction amount and number of transactions, sell transaction amount and number of transactions, total transaction amount and total number of transactions, total ETF transaction amount, the list of the top ten securities in terms of transaction amount and their buy transaction amount, sell transaction amount and total transaction amount will be announced, and the summary of the above data will be announced on a monthly and annual basis.

• The total number of Hong Kong Stock Connect investors holding a single security will be announced after the close of each Hong Kong Stock Connect trading day.

On July 26, the Hong Kong Stock Exchange's official website also released a related notice to update the introduction of the adjustment of the information disclosure mechanism for northbound and southbound transactions of the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect. The relevant adjustments will be officially implemented on August 19, 2024 (Monday). China Connect clearing participants are requested to refer to the relevant announcements to understand the details of the adjustments and make preparations for the adjustments.

Previously, in order to further optimize the Shenzhen-Hong Kong Stock Connect mechanism and ensure the consistency of overall information disclosure between the mainland and Hong Kong markets, on April 12, 2024, the Shenzhen, Shanghai and Hong Kong Stock Exchanges announced that they would simultaneously adjust the Shenzhen-Hong Kong Stock Connect transaction information disclosure mechanism.

At that time, it was reported that in order to reserve sufficient debugging and transition time for the market and ensure that all market participants are adequately prepared, the adjustment will be carried out in two phases: in the first phase, the Hong Kong Stock Exchange will complete the adjustment of the real-time trading information of the Shanghai-Shenzhen Stock Connect, which is expected to be implemented in one month; in the second phase, the Shanghai, Shenzhen and Hong Kong stock exchanges will simultaneously complete the disclosure adjustments of other trading information, which is expected to be implemented three months after the completion of the first phase.

According to relevant persons in charge of the Shanghai and Shenzhen Stock Exchanges, the Shanghai-Shenzhen-Hong Kong Stock Connect transaction information disclosure mechanism was originally intended to effectively disclose and remind investors of the use of their trading quotas, but its disclosure frequency and content are different from the general practice of information disclosure in the A-share market, and also different from the common practice of international mainstream markets. From the perspective of international practice, mainstream markets such as Europe and the United States do not disclose the transaction information of a specific category of investors in real time during trading, nor do they make differentiated arrangements for domestic and international investors in terms of the transaction information disclosure mechanism.

In order to maintain the consistency of overall market information disclosure, improve the adaptability of information disclosure to market development, and ensure fairness in investors' access to information, under the guidance of the two securities regulatory commissions, the Shanghai, Shenzhen and Hong Kong stock exchanges have adjusted the information disclosure mechanism for the Shanghai-Hong Kong Stock Connect transactions based on the home field principle, i.e., relevant trading activities should comply with the regulatory requirements and business rules of the place where the transactions take place, and comprehensively considered the characteristics of the investor structure and information disclosure practices of the two markets.

Since the launch of the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, under the guidance of the two local securities regulatory commissions, the Shanghai, Shenzhen and Hong Kong stock exchanges and relevant parties have worked closely together to continuously improve the rules and regulations of the interconnection system, coordinate the optimization of the interconnection mechanism, and implement a series of optimization measures, including canceling the total quota limit, expanding the daily quota, expanding the scope of target products and securities, introducing the northbound investor identification code system and the southbound investor identification code system, and optimizing the trading calendar.

As of the end of March 2024, the market capitalization of stocks connected through the Shanghai-Shenzhen Stock Connect accounted for more than 90% of the A-share market, and the market capitalization of stocks connected through the Hong Kong-Shenzhen Stock Connect accounted for more than 80% of the Hong Kong Stock Exchange's main board market. The Shanghai-Shenzhen-Hong Kong Stock Connect has become an important window for the two-way opening of my country's capital market, and has made positive contributions to the reform and stable development of the capital markets in both places.

The Central Financial Work Conference proposed that we should coordinate opening up and security and steadily expand the institutional opening up of the financial sector. The Shanghai and Shenzhen Stock Exchanges will continue to implement the spirit of the Central Financial Work Conference, follow the overall deployment of the two securities regulatory commissions, promote more target products and trading methods to be included in the Shanghai-Shenzhen-Hong Kong Stock Connect, further optimize and improve the interconnection mechanism, help the high-level institutional opening up of the capital market, promote high-quality development with high-level opening up, and better serve China's modernization.

Editor: Xiaomo

Audit: Wooden Fish

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