Clear and Settlement

Clearing and Settlement of the Stock Connect

Overview

CSDC and HKSCC will establish trading links and become each other’s clearing participant to provide clearing services for Shanghai-Hong Kong Stock Connect. In other words, CSDC and HKSCC will settle with each other and undertake the settlement obligations of their respective clearing participants’ trades.

Through this approach, both clearing houses are able to build this program upon the Isolation of Risk Principle, where the settlement risk of each market is undertaken by their respective clearing house only.



Clearing and settlement for Shanghai Stock Connect Trade

HKSCC, as a clearing participant of CSDC, will open and maintain an omnibus stock account with CSDC. Regarding Shanghai Stock Connect trades, HKSCC holds SSE securities in its omnibus account in CSDC on behalf of CCASS Participants.

HKSCC will settle for Shanghai Stock Connect trades executed on SSE with CSDC in Shanghai on behalf of its clearing Participants.

Shanghai Stock Connect trades will be cleared and settled according to the settlement cycle of the Shanghai securities market, where security settlement will take place on T-day, and money settlement will take place on T+1. Currency for such transaction is RMB.

The following Diagram illustrates the settlement arrangement for Shanghai Stock Connect trades.