The Stock Exchange of Hong Kong Limited (SEHK) and Hong Kong Securities Clearing Company Limited (HKSCC), wholly-owned subsidiaries of Hong Kong Exchanges and Clearing Limited (HKEX), have signed an agreement (the Four-party Agreement) today with the Shenzhen Stock Exchange (SZSE) and China Securities Depository and Clearing Corporation Limited (ChinaClear) for the establishment of Shenzhen-Hong Kong Stock Connect.
Shenzhen Connect, another step forward in mutual market access, builds on the successful model of Shanghai-Hong Kong Stock Connect (Shanghai Connect) to allow investors to buy and sell eligible shares listed in the Mainland and Hong Kong markets.
Shenzhen Connect has been developed according to the principles set out in the joint announcement by Hong Kong’s Securities and Futures Commission (SFC) and China Securities Regulatory Commission (CSRC) on 16 August 2016 regarding their approval, in principle, of the development of mutual stock market access between Shenzhen and Hong Kong.
The Four-party Agreement was signed by HKEX Chief Executive Charles Li, SZSE President Wang Jianjun and ChinaClear General Manager Dai Wenhua. HKEX Chairman C K Chow and SZSE Chairman Wu Lijun witnessed the signing.
HKEX Chairman C K Chow said:
Our agreement with the Shenzhen Stock Exchange and ChinaClear is another important step towards our goal of launching Shenzhen Connect. The development of Hong Kong and Shenzhen has been closely linked for almost 40 years. With the launch of Shenzhen Connect, cooperation between our market and the Mainland market will be raised to a new level. It will also significantly reinforce the bonds between Hong Kong and Shenzhen.”
SZSE Chairman Wu Lijun added:
Shenzhen Connect is a major policy initiative by the Central Government to promote reform and opening-up in the capital market. It is a top priority on Shenzhen Stock Exchange’s work agenda. Under the guidance of the regulators on both sides and with the joint efforts of the two stock exchanges and market participants, Shenzhen Connect has been making good progress. The Four-party Agreement is an important milestone which represents a consensus on the trading and clearing mechanisms between the two exchanges and two clearing houses. It is also the basis and pre-condition for various other agreements for the implementation of Shenzhen Connect. The successful signing of the Four-party Agreement underlines the achievements in our preparation for Shenzhen Connect, paving the way for the early launch of the initiative.”
ChinaClear General Manager Dai Wenhua concluded:
The signing of the Four-party Agreement is a new starting point to further and deepen our cooperation. As an important Financial Market Infrastructure supporting the Stock Connect programme of the Mainland and Hong Kong markets, ChinaClear will continue to optimise its risk management and emergency mechanism to provide safe, convenient and efficient depository and clearing services, and will support the smooth implementation and operation of Shenzhen Connect.”
HKEX expects the Hong Kong market should be ready for the implementation of Shenzhen Connect in the second half of November. However, the commencement of the programme is subject to market readiness and approval by the CSRC and SFC.