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| 1. What is Shanghai-Hong Kong Stock Connect? | Shanghai-Hong Kong Stock Connect is a mechanism established for connectivity of trading and clearing between Shanghai and Hong Kong securities markets. The mechanism involves Northbound Trading and Southbound Trading.
With Northbound Trading, investors, through their Hong Kong brokers and a securities trading service company to be established by SEHK, will be able to place orders to trade eligible shares listed on SSE by routing orders to SSE.
With Southbound Trading, eligible investors, through Mainland securities firms and a securities trading service company to be established by SSE, will be able to place orders to trade eligible shares listed on SEHK by routing orders to SEHK.
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| 2. Overview of Shanghai-Hong Kong Stock Connect Features | | | Northbound Trading | Southbound Trading | | Qualification | No restriction
| Institutional investors or holders of personal account with no less than RMB500,000. | | Investment Products | Constituents of SSE 180 Index and SSE 380 Index, and A shares with corresponding H shares listed on SEHK | Constituents of Hang Seng Composite LargeCap Index and Hang Seng Composite MidCap index, and H shares with corresponding A shares listed on SSE | | Ineligible Products | Shanghai stocks not quoted in RMB, Shanghai stocks under risk alert
| Hong Kong stocks not quoted in HKD,
H shares with correspondent A shares tradable on Shenzhen Stock Exchange, H shares which have corresponding A shares put under "risk alert"
| | Investment Quota | Daily quota: RMB13 billion | Daily quota: RMB10.5 billion | | Number of Tradable Stocks (As of 2016/08/31) | 573 | 318 | | Trading Hours | Opening call auction hours | Pre-opening hours | | 09:15 - 09:25* | 09:00 - 09:30 | | Continuous auction hours | Continuous trading hours | | 09:30 - 11:30* | 09:30 - 12:00 | | 13:00 - 15:00* | 13:00 - 16:00 | | Closing Auction Session | | 16:00 - 16:10 | | Trading Currency | Trading and settlement by RMB | Trading and settlement by RMB | | Stock Code | 6 digits
(Eg: Petrochina A Share code: 601857)
| 5 digits
(Eg: Petrochina H share code: 00857)
| | Order Type | Limit orders only | Pre-opening session: At-auction limit orders only
Continuous Trading Hours: enhanced limited orders only
Closing Auction: At-auction limited orders only
| | Day Trading | Not Allowed | Allowed | | Odd Lot | Selling only | Selling only, offers possibly inferior to market prices | | Short Selling | Allowed | Not Allowed | | Margin Financing | Allowed | Allowed | | IPO Subscription | Not Allowed | Not Allowed | | Lot Size | 100 shares | Varies among stocks | | Order Size Limit | 1 million shares | 3000 Lots | | Minimum Spread | RMB0.01 | Depends on stock price | | Volatility Restriction | ±10% against previous closing price or
±5% against previous closing price for stocks under risk warning
| Under Volatility Control Mechanism (VCM), HSI & HSCEI constituent stocks will put into a cooling off period for 5 minutes if the stock price fluctuates more than 10% from the reference price from 5 minutes ago. Maximum of 1 trigger in morning and afternoon session. | | Settlement Cycle | T for stocks; T+1 for funds | T+2 for stocks and funds | | Shareholder Voting | Through CCASS’s existing voting functions | ChinaClear to collect and submit votes | | *During 09:10-09:15, 09:25-09:30 and 12: 55-13:00, the SSE does not process any orders until the market opening, but SEHK still accepts buying/selling orders and instruction for order cancellation order. | |
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| 3. What kinds of shares are tradable through Shanghai-Hong Kong Stock Connect? | | | Northbound Trading | Southbound Trading | | Index Constituents | SSE 180 Index constituents | Hang Seng Composite LargeCap Index constituents | | SSE 380 Index constituents | Hang Seng Composite MidCap Index constituents | | A+H Shares | A shares with corresponding H shares listed on SEHK | H shares with corresponding A shares listed on SSE | | Ineligible Stocks | Shanghai stocks not quoted in RMB, Shanghai stocks under risk alert | Hong Kong stocks not quoted in HKD, H shares with correspondent A shares tradable on Shenzhen Stock Exchange, H shares which have corresponding A shares put under "risk alert" | | Number of Stocks (As of 2016/08/31) | 573 | 318 | | Transaction Cost | Transaction amount x 0.14687%* | Transaction amount x 0.108%* + HK$3 per trade
| | * Including stamp duty, exchange fee, SFC levy and transfer fee
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Stocks of Northbound Trading would be suspended for buying (still allowed for selling) under the following circumstances:
(a) stocks which are no longer classified as relevant index constituents; and / or
(b) risk warning is implemented; and / or
(c) corresponding H-share is no longer listed on SEHK for trading.
Stocks of Southbound Trading would be suspended for buying (still allowed for selling) under the following circumstances:
(a) stocks which are no longer classified as relevant index constituents; and / or
(b) corresponding A-share is no longer listed on SSE for trading; and / or
(c) corresponding A-share is listed on an exchange other than SSE in Mainland China.
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| 4. Can investors buy or sell stocks in Shanghai-Hong Kong Stock Connect through existing Hong Kong brokers? | | Hong Kong and overseas investors can choose any SEHK participant for trading stocks in Shanghai-Hong Kong Stock Connect, but the chosen participant must be eligible to participate in scheme.
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| 5. Investment Quota Restriction on Shanghai-Hong Kong Stock Connect | Shanghai-Hong Kong Stock Connect is for RMB cross-border investments subject to daily quota management with real-time monitoring. The quota is served on the first-come-first-served principle.
The “Quota” does not refer to the total inflows, rather, it indicates the upper limit for the difference between the buying and selling values. All quota refers to the net amount after the buying value minus selling value. The daily quota is refreshed on a daily basis and to maintain the same. The unused daily quota cannot be rolled over to the quota for the following day.
| | Investment Quota | Northbound Trading | Southbound Trading | | Daily Quota (RMB) | 13 billion | 10.5 billion |
Daily quota balance = Daily quota – Buying order value + Selling transaction value + Adjustment*
*Daily quota balance is increased under the following circumstances:
Buying order is cancelled, or
Buying order is rejected by the exchange on the other side, or
Buying order is executed for a better price
The stocks in Southbound Trading are traded by Mainland investors in Renminbi.
The stocks in Northbound Trading are traded and settled in Renminbi by Hong Kong and overseas investors.
If Daily Quota Balance drops to zero or is exceeded during a continuous auction session (Continuous Trading), no further buy orders will be accepted for the remainder of the day.
If Daily Quota Balance drops to zero or is exceeded during the opening call session, new buy orders will be rejected. However, the Daily Quota Balance may resume to a positive level before the end of the opening call auction due to order cancellation. When that happens, SEHK will again accept buy orders.
It should be noted that buy orders already accepted will not be affected by the Daily Quota being used up and will remain on the order book of SSE unless otherwise cancelled by the relevant EPs.
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| 6. Trading Hours for Shanghai-Hong Kong Stock Connect | The session for Northbound Trading is in line with the trading hours of SSE. SEHK starts to accept the orders from SEHK participants 5 minutes before the opening of morning session and afternoon session in SSE.
| | SSE Trading Session | SSE Trading Hours | Time for EPs to input
Northbound orders | | Opening Call Auction | 09:15-09:25 | 09:10-11:30 | | Continuous Auction (Morning) | 09:30-11:30 | | Continuous Auction (Afternoon) | 13:00-15:00 | 12:55-15:00 |
During 09:20-09:25, SSE does not accept instructions for order cancellation;
During 09:10-09:15, 09:25-09:30 and 12: 55-13:00, the SSE does not process any orders until the market opening, but SEHK still accepts buying/selling orders and instruction for order cancellation order;
The unmatched buying/selling orders in the Opening Call Auction are to automatically enter Continuous Auction.
The session for Southbound Trading is in line with the trading hours of SEHK.
Shanghai-Hong Kong Stock Connect operates only on trading days for both Shanghai and Hong Kong markets. If the fund settlement day is not a trading day in Hong Kong, Northbound Trading is closed on the previous trading day.
If a Northbound trading day is a half trading day in Hong Kong market, Northbound Trading will continue until SSE market is closed.
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| | Mainland | Hong Kong | Open for Northbound? | | Day-1 | Business Day | Business Day | Yes | | Day-2 | Business Day | Business Day | No |
HK market closes on money settlement day
| | Day-3 | Business Day | Public Holiday | No | HK market closes on trading day
| | Day-4 | Public Holiday | Business Day | No | Mainland market closes
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| 7. Charges of Shanghai-Hong Kong Connect | | Relevant fees and taxes involved in Northbound Trading of Shanghai-Hong Kong Stock Connect:
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| | Item | Rate | Paying Party | Receipt Party | | Handling Fee | 0.00696% of transaction value | Both sides | Shanghai Stock Exchange | | Securities Management Fee | 0.002% of transaction value | Both sides | China Securities Regulatory Commission | | Transfer Fee | 0.02% of transaction value | Both sides | China Securities Depository and Clearing Corporation Limited | | 0.02% of transaction value | Both sides | HK Securities Clearing Company Ltd | | Stamp Duty | 0.1% of transaction value | Seller | State Administration of Taxation | | Note: Mainland fees will be rounded to the nearest cent | |
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Fees and Taxes to be confirmed by regulators and tax departments:
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| | Item | Detail | Receipt Party | | New CCASS Fee | New fee for providing depository and nominee services to Clearing Participants for SSE Securities (subject to approval by SFC) | HK Securities Clearing Company Ltd | | Dividend Tax | Applicable to cash dividend and bonus issue (subject to clarification with SAT) | State Administration of Taxation | | Capital Gain Tax | Applicable to share disposal (subject to clarification with SAT) | State Administration of Taxation | |
| | Dividend tax on Northbound Trading stocks is withheld by issuer and ChinaClear from payment. The New CCASS Fee is collected in HK Dollar monthly, if implemented.
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| 8. Arrangement for Shanghai-Hong Kong Stock Connect under Bad Weather | | Scenario | Northbound Trading | HK Market Today | | Typhoon No.8 or Black Rainstorm issued before HK market opens (i.e. 9:00 a.m.) | Not open | Not open | | Typhoon No.8 issued between 9:00 a.m. and 9:15 a.m. | Not open | Trading suspends after pre-opening session | | Typhoon No.8 issued after SSE market opens (i.e. 9:15 am) | Trading will continue for 15 minutes, thereafter, only order cancellation is allowed till SSE market close | Trading terminates in 15 minutes | | Black Rainstorm issued after HK market opens | Normal trading | Normal trading | | Typhoon No.8 or Black Rainstorm discontinued at or before 12:00 noon | Trading resumes after 2 hours | Trading resumes after 2 hours | | Typhoon No.8 or Black Rainstorm discontinued after 12:00 noon | Not open | Not open | |
Source: HKEx
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