Optimize the Stock Connect Scheme to Serve the Two-Way Institutional Opening of the Capital Market

24 Dec 2021

Recently, the China Securities Regulatory Commission solicited public comments on the Provisions on the Supervision and Administration of Depository Receipts under the Stock Connect Scheme between Domestic and Overseas Stock Exchanges (hereinafter referred to as Provisions). This marks that depositary receipts under the stock connect scheme between domestic and overseas stock exchanges, which initiated with Shanghai-London Stock Connect, are about to enter a new stage of development. In order to steadily prepare for relevant business and to ensure the smooth launch of the scheme, the Shanghai Stock Exchange has formulated supporting business rules in accordance with the Provisions and solicits public comments from today.

The business rules open for public comments include the Interim Measures for the Listing and Trading of Depositary Receipts under the Stock Connect Scheme between the Shanghai Stock Exchange and Overseas Stock Exchanges (Draft for Comment) and three guidelines, namely the Guidelines for Pre-Listing Review of Chinese Depository Receipts under the Stock Connect Scheme between the Shanghai Stock Exchange and Overseas Stock Exchanges (Draft for Comment), the Guidelines for Cross-Border Conversion of Depository Receipts under the Stock Connect Scheme between the Shanghai Stock Exchange and Overseas Stock Exchanges (Draft for Comment), and the Guidelines for Market Making for Chinese Depository Receipts under the Stock Connect Scheme between the Shanghai Stock Exchange and Overseas Stock Exchanges (Draft for Comment). The business rules made corresponding adjustments to CDRs’ listing conditions, pre-review arrangements with capital raising, trading and cross-border conversion mechanisms, continuous supervision requirements, investor suitability requirements, and several clauses on GDRs.

In the past years, the SSE has been exploring and improving connectivity scheme with overseas securities markets. Since the launch of the Shanghai-London Stock Connect, four listed companies on the Shanghai Stock Exchange, namely Huatai Securities, China Pacific Insurance, Yangtze Power and SDIC Power have offered global depository receipts (GDRs) and listed on the London Stock Exchange. The Connect has played a positive role in broadening channels for two-way cross-border financing and supporting the real economy. In promoting the business of CDRs, the SSE has extensively communicated with overseas companies and conducted in-depth discussions with domestic and overseas market participants on advancing the listing of certain key potential issuers and accumulated valuable experience. In the next step, the SSE will continue to carry out the strategy of internationalization under the leadership of the CSRC to deepen cross-border cooperation and connectivity mechanism and enhance its capacity in allocation of global resources and better serve the two-way institutional opening-up of the capital market in a more efficient manner.

Notice for Public Consultation on Rules of Depositary Receipts under Stock Connect Scheme between Shanghai Stock Exchange and Overseas Stock Exchanges