The Financial Conduct Authority (FCA) and the China Securities Regulatory Commission (CSRC) have made it clear today that they both approve the Shanghai and London Stock Exchanges’ proposed new Shanghai-London Stock Connect.
The Stock Connect scheme launches today and is a aims to encourage cross-border investment between the countries and provide investors and companies in the UK and China with mutual access to each other’s capital markets.
The Shanghai Stock Exchange (SSE) and London Stock Exchange (LSE) initiative will enable Shanghai-listed Chinese companies to apply to be admitted to trading on a newly formed Shanghai Segment of London Stock Exchange’s Main Market, while companies with a premium listing in the UK will be able to apply for admission to the Main Board of the SSE.
Andrew Bailey, FCA’s Chief Executive commented:
This new scheme will deepen and strengthen connectivity between UK and China capital markets to the advantage of both countries. We both believe in the positive contribution regulators can make in international capital markets, and the new co-operation we’re announcing today will be an important contributor to the success of the scheme.
The structure is new to China and offers Chinese investors a unique opportunity to gain exposure to international securities via an exchange located in their own country and currency. From a UK perspective, the scheme offers institutional investors a broader opportunity to gain exposure to the Chinese A-share market which has been historically restricted to those western institutions with ‘Qualified Foreign Institutional Investor’ status.