Guidelines No. 2 of Shanghai Stock Exchange on the Application of Securities Trading Rules – Reporting of Program Trading by Northbound Trading Link Investors
DISCLAIMER
The English version of the Reporting Guidelines and its annexes is for reference purpose only. The Shanghai Stock Exchange and/or its subsidiaries assume no liability for any form of loss or damage resulting from its use and make no warranty, guarantee, undertaking, or representation, whether expressed or implied, in relation to the accuracy, reliability, availability, accessibility, or completeness of the English version.
The English version is provided to help investors understand the relevant requirements. Please refer to the original Chinese version when filling out the related forms.
Article 1 These Guidelines are formulated in accordance with the Provisions on the Administration of Program Trading in the Securities Market (Trial Implementation), the Implementing Measures of the Shanghai Stock Exchange for the Shanghai-Hong Kong Stock Connect (“Shanghai-Hong Kong Stock Connect Measures”), the Implementing Rules of the Shanghai Stock Exchange for the Administration of Program Trading (“Implementing Rules”), and other applicable rules and the principle of equal treatment of domestic and overseas capital in order to clarify the reporting requirements for investors engaging in program trading at the Shanghai Stock Exchange (the “Exchange”) through the mutual market access scheme between the Shanghai and Hong Kong stock markets, strengthen the management of program trading, maintain the order of securities trading and market fairness, and protect the lawful rights and interests of investors.
Article 2 Investors who engage in the program trading of stocks, funds, or other securities at the Exchange market through the mutual market access scheme between the Shanghai and Hong Kong stock markets (“Northbound Program Traders”) shall file report with the Exchange in a timely manner in accordance with these Guidelines, and shall ensure the authenticity, accuracy and completeness of the relevant information.
Article 3 In these Guidelines, “Northbound Program Traders” include the following investors who engage in program trading in the Exchange market:
(1) Clients of the Stock Exchange of Hong Kong (“SEHK”) Participants;
(2) SEHK Participants who engage in such activities as proprietary trading and asset management; and
(3) Any other Northbound Program Traders recognized by the Exchange.
Article 4 The securities trading service company established in Shanghai by SEHK (“SEHK Securities Trading Service Company”) shall enhance the management of Northbound Program Traders, shall appropriately alert and supervise SEHK Participants to comply with the Implementing Rules and these Guidelines, and shall require SEHK Participants to alert and supervise their clients to comply with the aforementioned rules and guidelines and fully disclose to their clients the potential liabilities for violating the foregoing provisions.
The Exchange may, based on self-regulatory needs, request SEHK to promptly contact Northbound Program Traders through SEHK Participants, and the relevant parties shall actively provide cooperation.
Article 5 Before engaging in program trading for the first time, a client shall file a report with the SEHK Participant that accepts the client's trading orders, and shall only begin program trading after the report is reviewed and verified by the SEHK Participant. The SEHK Securities Trading Service Company shall require the SEHK Participant to alert and supervise the client to comply with the foregoing provisions and, upon receiving the client’s report, provide its response and confirmation in a timely manner and submit the report to the Exchange for confirmation through the SEHK Securities Trading Service Company within five Northbound Trading Days.
If an SEHK Participant is authorized by its service agreement or other appropriate arrangements with clients to automatically generate or place trading orders for them through computer programs, it may fulfill the corresponding program trading reporting and other related obligations on behalf of its clients.
An SEHK Participant shall file a report with the SEHK Securities Trading Service Company before engaging in program trading for the first time, and may only begin program trading after the report is received by the SEHK Securities Trading Service Company and confirmed by the Exchange.
The SEHK Securities Trading Service Company shall, on each Northbound Trading Day, submit the information it has received from Northbound Program Traders to the Exchange for confirmation.
Article 6 A Northbound Program Trader shall report the following information:
(1) General information, including its name, broker-to-client assigned number (BCAN), the SEHK Participant, and the asset management company, among others;
(2) Funding information, including the amount and source of funds under the BCAN, amount and source of leveraged funds, and the leverage ratio, among others;
(3) Trading information, including the types and key aspects of the trading strategies under the BCAN, order execution method, maximum order rate, and maximum daily order count, among others;
(4) Trading software information, including the name, version number, and developer of the trading software, among others; and
(5) Any other information required by the Exchange.
In case of any material change to the above information, the Northbound Program Trader shall submit an update report within the first five Northbound Trading Days of the next calendar month following the change.
Article 7 Any Northbound Program Trader that engages in high-frequency trading as defined in the Implementing Rules will be subject to enhanced supervision by the Exchange. In addition to the information specified in the first Paragraph of Article 6, such Northbound Program Trader shall further report:
(1) Server location for the high-frequency trading system;
(2) Test report for the high-frequency trading system;
(3) Contingency plan for potential failures of the high-frequency trading system; and
(4) Any other information required by the Exchange.
The Exchange may adjust the circumstances and reporting items specified in the preceding Paragraph based on self-regulatory needs.
The first Paragraph of this Article does not apply to fund management companies that exclusively offer public funds, SEHK Participants that engage in asset management and meet relevant requirements, Northbound Program Traders that are recognized as Qualified Foreign Investors, and other investors specially recognized by the Exchange, if in each case they only automate the execution of orders during the trading phase according to a preset order splitting algorithm to reduce the market impact of large orders or to ensure transactional fairness among the different portfolios and have fulfilled the reporting obligations under Article 6.
Article 8 The SEHK Securities Trading Service Company shall require any SEHK Participant that accepts program trading orders from clients to enter into a service agreement or other appropriate arrangements with the clients to specify their respective rights and obligations and other matters relating to program trading, and to clarify the SEHK Participant’s management responsibilities and risk control requirements for the clients.
The SEHK Securities Trading Service Company shall require SEHK Participants to establish monitoring, identification, and report verification mechanisms for program trading such that they can promptly identify clients who have met the conditions for filing an initial or update report, alert and supervise clients to promptly fulfill reporting obligations, and, to the extent of the materials they have access to, verify the information reported by clients.
If a client fails to report or update relevant information as required or reports untrue information, the SEHK Securities Trading Service Company shall require the SEHK Participant to alert and supervise the client to fulfill the client's reporting obligations as required. If, after such alert and supervision, the client still fails to file report or updates as required, or refuses to cooperate with the verification process of the SEHK Participant, the SEHK Securities Trading Service Company shall require the SEHK Participant to reject further program trading orders from the client pursuant to the service agreement or other written arrangements and report the situation to the SEHK Securities Trading Service Company.
Article 9 The Exchange performs regular data screening to check the consistency between Northbound Program Traders' trading activities and the trading strategies, frequencies, and other information they have reported.
The Exchange's receipt, comparison, and management of the information reported by Northbound Program Traders pursuant to these Guidelines do not represent its judgment or guarantee as to the availability, security, compliance, or any other aspects of the Northbound Program Traders, of their program trading strategies, or of their information technology systems.
Article 10 If a Northbound Program Trader fails to fulfill initial or update reporting obligations as required, submits an incomplete report, reports information inconsistent with the Northbound Program Trader's trading activities, or otherwise violates these Guidelines, the Exchange may, pursuant to the Trading Rules of the Shanghai Stock Exchange, the Shanghai-Hong Kong Stock Connect Measures, the Implementing Measures of the Shanghai Stock Exchange for Disciplinary Sanctions and Regulatory Measures, and other applicable market rules, request SEHK to require its participants to alert and supervise the investor to rectify the situation. The Exchange may further request SEHK's assistance in imposing the corresponding regulatory measures or disciplinary sanctions through the regulatory cooperation arrangements for the Shanghai-Hong Kong Stock Connect. Suspected violation of laws or regulations will be reported by the Exchange, based on relevant laws and regulations, to the China Securities Regulatory Commission for investigation and handling.
Article 11 In case of any violation of the reporting management or other rules of these Guidelines during program trading activities through the Northbound Trading Link, the Exchange may, pursuant to the self-regulatory provisions of the Shanghai-Hong Kong Stock Connect Measures and the regulatory cooperation arrangements for the Shanghai-Hong Kong Stock Connect, request SEHK to impose the corresponding regulatory measures or disciplinary sanctions on the relevant SEHK Participant.
Article 12 If a Northbound Program Trader enters into a swap or other transaction with a client and conducts program trading at the Exchange through its own account, the Exchange may obtain the relevant information about the client through the regulatory cooperation arrangements for the Shanghai-Hong Kong Stock Connect.
Article 13 These Guidelines take effect on January 12, 2026. Any Northbound Trading Link investors that have engaged in program trading before this effectiveness date shall file a report within three months following the effectiveness date.
Annexes:
1. SSE Program Trading Reporting Form for Northbound Trading Link Investors
2. Instructions for the SSE Program Trading Reporting Form for Northbound Trading Link Investors