Measures of Shenzhen Stock Exchange for the … · 4 as prescribed in these Measures and other...
Transcript of Measures of Shenzhen Stock Exchange for the … · 4 as prescribed in these Measures and other...
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Measures of Shenzhen Stock Exchange
for the Implementation of Shenzhen-Hong Kong Stock Connect Program
Chapter I General Provisions
Article 1 These Measures are formulated in accordance with the Several Provisions
on the Mutual Stock Market Access Mechanism between the Mainland and Hong
Kong (hereinafter, Provisions) issued by the China Securities Regulatory Commission
(hereinafter, CSRC), the Trading Rules of Shenzhen Stock Exchange (hereinafter,
Trading Rules), the Membership Management Rules of Shenzhen Stock Exchange
(hereinafter, Membership Rules) and other relevant rules of Shenzhen Stock
Exchange (hereinafter, Exchange or SZSE) for the purpose of regulating the
implementation of the Shenzhen-Hong Kong Stock Connect Program, preventing risk
and protecting the legitimate rights and interests of investors.
Article 2 Investors, the Exchange members, the securities trading service company
(hereinafter, SEHK Securities Trading Service Company) established by the Stock
Exchange of Hong Kong (hereinafter, SEHK), the securities trading service company
established by the Exchange (hereinafter, SZSE Securities Trading Service Company)
and other market participants shall comply with these Measures when they participate
in the Shenzhen-Hong Kong Stock Connect Program and other relevant activities.
Matters not prescribed in these Measures concerning the Shenzhen Connect trading
under the Shenzhen-Hong Kong Stock Connect (excluding investors’ instruction for
securities trading), the instruction for Hong Kong Connect trading under the
Shenzhen-Hong Kong Stock Connect, and the client management of the Exchange
members shall be governed by the Trading Rules, the Membership Rules and other
relevant rules of the Exchange.
Article 3 The Exchange exercises self-regulation of trading and other relevant
activities carried out under the Shenzhen-Hong Kong Stock Connect Program.
Chapter II Shenzhen Connect Trading
Section 1 Participation of SEHK Securities Trading Service Company in
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Shenzhen Connect Trading
Article 4 In order to participate in Shenzhen Connect trading, SEHK Securities
Trading Service Company shall apply to become an Exchange trading participant and
obtain a marketing unit, and shall comply with the Exchange’s relevant regulations on
the trading participants.
SEHK Securities Trading Service Company is not a member of the Exchange and thus
is not entitled to the Exchange members’ rights under laws, administrative regulations,
government department rules, regulatory documents, the Constitution of Shenzhen
Stock Exchange and Membership Management Rules.
Article 5 SEHK Securities Trading Service Company that applies to become an
Exchange trading participant shall submit the following documents:
(1) The Application Form and Letter of Undertaking;
(2) The approval documents issued by the CSRC and the Hong Kong Securities and
Futures Commission (hereinafter, SFC);
(3) Its Business License for Enterprise as a Legal Person;
(4) Its articles of association;
(5) Its management system and technical arrangement for Shenzhen Connect, and its
arrangement of appointing SEHK to take relevant responsibilities in respect of
Shenzhen Connect;
(6) The personal information on its directors, supervisors and senior officers;
(7) The Letter of Undertaking, technical standards and other requirements for SEHK
participants to participate in Shenzhen Connect;
(8) The settlement agreement between SEHK Securities Trading Service Company
and Hong Kong Securities Clearing Company Limited (hereinafter, HKSCC) on
Shenzhen Connect;
(9) The list of SEHK participants who intend to participate in Shenzhen Connect, and
a statement that such participants satisfy the technical standards and other
requirements;
(10) The fee collection method and fee structure for Shenzhen Connect; and
(11) Other documents as required by the Exchange.
Article 6 SEHK Securities Trading Service Company shall route to the Exchange the
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investors’ orders placed with SEHK participants for Shenzhen Connect trading and
bear the relevant trading responsibilities accordingly.
After the orders for Shenzhen Connect trading are executed on the Exchange, SEHK
Securities Trading Service Company shall acknowledge the trading results, accept the
trading report and send the same to relevant SEHK participants and HKSCC.
SEHK Securities Trading Service Company shall manage the trading activities of
SEHK participants in respect of Shenzhen Connect, and take necessary measures as
required by the Exchange against irregular trading activities under Shenzhen Connect.
Article 7 SEHK Securities Trading Service Company may appoint the SEHK to
perform the relevant duties prescribed in these Measures on its behalf, but shall still
be liable for insufficient or inappropriate performance of such duties.
Article 8 SEHK Securities Trading Service Company shall develop risk control
measures for Shenzhen Connect to enhance internal controls and prevent business
risks.
Article 9 SEHK Securities Trading Service Company shall establish the technical
standards and other requirements for SEHK participants to participate in Shenzhen
Connect, and test and assess the technical systems of the SEHK participants who
intend to participate in Shenzhen Connect.
Article 10 SEHK Securities Trading Service Company shall require the eligible
SEHK participants to sign the Letter of Undertaking on Shenzhen Connect. The Letter
of Undertaking shall include but not be limited to: complying with applicable laws,
administrative regulations, government department rules, regulatory documents and
operational rules of the Mainland China and Hong Kong; acknowledging and
implementing the relevant requirements imposed by SEHK Securities Trading Service
Company on the SEHK participants based upon the above provisions and the
agreements between the two parties, and requiring their clients to acknowledge and
implement relevant requirements through contracts or other arrangements;
acknowledging and requiring their clients to acknowledge through contracts or other
arrangements the relevant regulations on the exemption of the Exchange from liability
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as prescribed in these Measures and other rules of the Exchange.
Article 11 SEHK Securities Trading Service Company shall provide necessary
convenience and guidance for Shenzhen Connect investors and SEHK participants to
learn applicable laws, administrative regulations, government department rules,
regulatory documents, operational rules, business processes, and fee structures and
collection methods.
Article 12 SEHK Securities Trading Service Company shall comply with the
applicable laws, administrative regulations, government department rules, regulatory
documents and operational rules of the Mainland.
SEHK Securities Trading Service Company shall, in an appropriate manner, procure
that SEHK participants comply with the applicable laws, administrative regulations,
government department rules, regulatory documents of the Mainland and the
operational rules of the Exchange, and shall require SEHK participants to procure that
their clients shall so comply. It shall require SEHK participants to sufficiently disclose
to their clients the risks involved in Shenzhen Connect trading and the risks of
liability for violating the aforesaid laws, regulations or rules.
Article 13 When there is any change in the materials submitted by SEHK Securities
Trading Service Company to the Exchange under Article 5 of these Measures, SEHK
Securities Trading Service company shall submit the updated materials to the
Exchange within 3 Shenzhen Connect trading days after such change takes place.
SEHK Securities Trading Service Company shall provide reports on the operation of
Shenzhen Connect pursuant to the requirements of the Exchange.
Article 14 Where a material event occurs on the part of SEHK Securities Trading
Service Company and affects or may affect its business operation, it shall
immediately report to the Exchange stating the causes, current situation, possible
consequences and its response measures.
Article 15 SEHK Securities Trading Service Company shall properly keep the
documents and materials produced as a result of the performance of its responsibilities
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under these Measures, and shall, in an appropriate manner, require SEHK participants
to properly keep their clients’ materials and the clients’ instruction and order records
under Shenzhen Connect. Such documents and materials shall be kept for a minimum
period of 20 years.
Section 2 Eligible Shares for Shenzhen Connect
Article 16 The eligible shares for Shenzhen Connect include:
(1) The constituents of SZSE Component Index and SZSE Small/Mid Cap Innovation
Index with an average daily market capitalization of at least RMB 6 billion in the
6 months prior to the deadline for periodic review of the relevant index; or, if the
constituent stock has been listed within the 6 months prior to the periodic review
of the relevant index, its average daily market capitalization in the period since it
was listed shall be no less than RMB 6 billion; and
(2) SZSE-listed A shares of A+H companies that are dual-listed on the Exchange
and the SEHK.
Shares listed in (1) and (2) of the previous paragraph will not be included in Shenzhen
Connect if they are:
(1) Issued a risk alert by the Exchange (i.e., ST and *ST shares);
(2) Suspended from listing by the Exchange;
(3) In the pre-delisting period;
(4) Quoted and traded in foreign currencies (i.e. B Share); or
(5) In other special situation as recognized by the Exchange.
With the approved of the regulatory authority, the Exchange may adjust the scope of
eligible shares for Shenzhen Connect.
Article 17 Shares listed on the Exchange but not included in Shenzhen Connect that
fall within (1) and (2) of the first paragraph of Article 16 but outside (1) to (5) of the
second paragraph of Article 16 of these Measures as a result of the adjustment of
constituent stocks of relevant indices shall be included in Shenzhen Connect.
With respect to a company listed on the SEHK (as H shares) that seeks listing on the
Exchange (as A shares), or of a company listed on the Exchange (as A shares) that
seeks listing on the SEHK (as H shares), or a company that seeks listing both on the
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Exchange (as A shares) and the SEHK (as H shares) on the same trading day, its A
shares may be included in Shenzhen Connect after the A shares have been listed for
10 trading days and the company’s H shares have passed the price stabilization period.
Article 18 Shenzhen Connect shares that fall outside (1) and (2) of the first paragraph
of Article 16 or within (1) to (5) of the second paragraph of Article 16 of these
Measures as a result of the adjustment of constituent stocks of relevant indices shall
be excluded from Shenzhen Connect.
Article 19 The criterion of average daily market capitalization for A shares under (1)
of the first paragraph of Article 16 hereof is only applied at the time of periodic
adjustment of constituent stocks of relevant indices, with relevant shares included
under or excluded from Shenzhen Connect on the date of periodic adjustment.
The constituent stocks that meet the market capitalization threshold shall be
determined by the Exchange.
Article 20 SEHK Securities Trading Service Company shall publish the list of eligible
shares for Shenzhen Connect on the websites it designates. The inclusion or exclusion
of the shares shall take effect at the time published by SEHK Securities Trading
Service Company.
Section 3 Trading-specific Matters
Article 21 Shenzhen Connect shares are quoted and traded in RMB.
Article 22 The trading calendar and trading hours of Shenzhen Connect shall be
published by SEHK Securities Trading Service Company on the website it designates.
Article 23 Shenzhen Connect shares are traded on an auction basis, unless otherwise
prescribed by the Exchange.
Article 24 Orders for Shenzhen Connect shares shall be limit orders, unless otherwise
prescribed by the Exchange.
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The limit orders for Shenzhen Connect shares shall include such information as the
securities account number, the broker code, the securities code, buy or sell, quantity
and price.
The Exchange may require SEHK Securities Trading Service Company to provide
investors’ information in relation to their orders for regulatory purposes.
Article 25 The shares excluded from Shenzhen Connect under Article 18 of these
Measures but still listed on the Exchange may be sold, but not be purchased, through
Shenzhen Connect.
Article 26 The eligible shares for margin trading and covered short selling under
Shenzhen Connect shall be among the eligible securities for margin trading and short
selling on the Exchange.
Article 27 SEHK Securities Trading Service Company shall specifically flag short
selling orders covered by Shenzhen Connect shares.
The order price of covered short selling shall not be lower than the last execution
price of the same stock; in the absence of any executed trade on the given trading day,
the order price shall not be lower than the previous closing price.
SEHK Securities Trading Service Company shall procure that SEHK participants
require that the order price at which its clients sell the shares borrowed for covered
short selling shall meet the requirements in the previous paragraph if they sell such
shares before returning the same, except for the portion of the shares that exceed the
unreturned amount of borrowed shares.
Article 28 The covered short selling ratio of a single Shenzhen Connect share during
a single Shenzhen Connect trading day shall not exceed 1%; the cumulative covered
short selling ratio of a single Shenzhen Connect share over 10 consecutive Shenzhen
Connect trading days shall not exceed 5%. SEHK Securities Trading Service
Company shall perform pre-trade control based on the aforesaid percentage limits.
At the end of each Shenzhen Connect trading day, SEHK Securities Trading Service
Company shall disclose the covered short selling ratios of Shenzhen Connect shares
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on the websites it designates.
The Exchange may adjust the percentage limits set in the first paragraph of this
Article or suspend the acceptance of covered short selling orders for Shenzhen
Connect shares in line with market conditions.
Article 29 Where the Exchange suspends margin trading of a single Shenzhen
Connect share due to the reason that the monitoring indicator for margin trading of
this share reaches the specified level, the Exchange may require SEHK Securities
Trading Service Company to suspend routing orders for margin trading of this share.
Where the Exchange resumes margin trading of this share due to the reason that the
monitoring indicator for margin trading of this single share falls to the specified level,
the Exchange may inform SEHK Securities Trading Service Company to resume
routing orders for margin trading of this share.
Where the Exchange suspends short selling of a single Shenzhen Connect share due to
the reason that the balance of this share to be lent for short selling reaches the
specified level, the Exchange may require SEHK Securities Trading Service Company
to suspend routing orders for covered short selling of this share. Where the Exchange
resumes short selling of this share due to the reason that the balance of this share to be
lent for short selling falls to the specified level, the Exchange may inform SEHK
Securities Trading Service Company to resume routing orders for covered short
selling of this share.
Article 30 Non-trading transfer of Shenzhen Connect shares is not allowed except:
(1) The lending of Shenzhen Connect shares for covered short selling with a term of
less than one month;
(2) The one-day, non-renewable lending of Shenzhen Connect shares for pre-check
purposes within the scope of securities held by oneself;
(3) The transfer of Shenzhen Connect shares between an SEHK participant and its
clients to correct an erroneous trade;
(4) The allocation of Shenzhen Connect shares purchased by a fund manager
through the omnibus account to different fund accounts under its management;
and
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(5) Other circumstances prescribed by the Exchange and China Securities
Depository and Clearing Corporation Limited (hereinafter, CSDC).
Article 31 SEHK Securities Trading Service Company shall, in a proper manner,
require SEHK participants to ensure that there are sufficient securities available in
their clients’ accounts when accepting the clients’ sell orders, and not to accept any
sell order from those who do not have sufficient securities available in their accounts.
Article 32 The shares purchased under Shenzhen Connect shall not be sold before
settlement.
Article 33 SEHK Securities Trading Service Company and SEHK participants shall
not match by themselves the investors’ buy and sell orders for Shenzhen Connect
shares, and shall not, in any other forms, provide transfer services for Shenzhen
Connect shares at any venue other than the Exchange, save as otherwise prescribed by
the CSRC.
Article 34 The public information disclosed in respect of any securities trade
executed under Shenzhen Connect through SEHK Securities Trading Service
Company shall be labeled as “Only for Shenzhen Connect”.
Article 35 Without the permission of the Exchange, SEHK Securities Trading Service
Company shall not disclose the transaction information licensed by the Exchange to
itself to any entity or individual other than the SEHK participants and the clients of
SEHK participants for use, dissemination or for the development of indices or other
products.
SEHK Securities Trading Service Company shall, in an appropriate manner, require
SEHK participants to comply with the provisions in the previous paragraph and
procure that their clients shall so comply.
Article 36 SEHK Securities Trading Service Company shall pay handling fees and
other relevant fees for Shenzhen Connect trading as per the fee structure of the
Exchange.
SEHK Securities Trading Service Company shall enter into an agreement with
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HKSCC instructing HKSCC to conduct clearing and settlement and pay handling fees
and other relevant fees in respect of Shenzhen Connect trading on its behalf.
Article 37 Unless otherwise prescribed by the Exchange, the SZSE-listed shares that
are not included in Shenzhen Connect and are obtained as a result of equity
distribution or conversion of Shenzhen Connect shares, acquisition of listed
companies under Shenzhen Connect or the occurrence of any abnormal situation may
be sold, but not be purchased, through Shenzhen Connect.
The non-SZSE-listed shares obtained as a result of equity distribution or conversion
of Shenzhen Connect shares, or acquisition of listed companies under Shenzhen
Connect are not allowed to be sold or purchased through Shenzhen Connect.
Article 38 The Exchange may adjust the trading methods, order types, order contents
and forms, business scope and trading limits, etc., for Shenzhen Connect in line with
market conditions.
Section 4 Quota Control
Article 39 SEHK Securities Trading Service Company shall monitor the usage of the
Shenzhen Connect daily quota on a real time basis and shall publish the same on the
designated website.
Article 40 The Shenzhen Connect daily quota balance shall be calculated as follows:
Daily Quota Balance = Daily Quota-Buy Orders + Sell Trades + Buy Orders
cancelled or Buy Orders rejected by the Exchange + Difference between the execution
prices and bid prices of Buy Orders.
Article 41 Once the Shenzhen Connect daily quota is used up during the opening
auction session, SEHK Securities Trading Service Company will not accept further
buy orders for the remainder of the session, but still accept sell orders. Once, before
the continuous auction session begins, the Shenzhen Connect daily quota balance
becomes positive due to cancellation of buy orders, rejection by the Exchange of buy
orders, or execution of sell orders, SEHK Securities Trading Service Company will
resume accepting subsequent Shenzhen Connect buy orders.
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Once the Shenzhen Connect daily quota is used up during the continuous auction
session, SEHK Securities Trading Service Company will not accept further buy orders
for the remainder of the session, but still accept sell orders. In such case, SEHK
Securities Trading Service Company will not resume accepting buy orders for the
remainder of the day, unless otherwise prescribed by the Exchange.
Article 42 The SEHK shall, in a proper manner, require SEHK participants not to,
and procure that they require their clients not to, use quota maliciously to affect quota
control by placing large buy orders at low prices when participating in Shenzhen
Connect trading.
Section 5 Shareholding Limits
Article 43 Investors participating in Shenzhen Connect shall observe the shareholding
limits prescribed in the Provisions.
Article 44 SEHK Securities Trading Service Company shall, in a proper manner,
require SEHK participants to reject investors’ orders, liquidate their positions or take
any other preventive and corrective measures if the investors breach shareholding
limits when trading Shenzhen Connect shares.
Article 45 When an investor fulfills information disclosure obligations under relevant
regulations, the shares of the same company listed at home and abroad and held by the
investor through Shenzhen Connect and other channels shall be aggregated.
Article 46 If, at the end of each trading day, the shares held by a single overseas
investor in the same listed company through Shenzhen Connect and other channels
exceed in the aggregate the specified limit, the investor shall liquidate the excess
shares within 5 Shenzhen Connect trading days and fulfill information disclosure
obligations in a timely manner pursuant to relevant regulations.
Article 47 If, at the end of each trading day, the shares held by all overseas investors
in the same listed company through Shenzhen Connect and through other channels
exceed in the aggregate the specified limit, the Exchange will, on a last-in-first-out
basis, give notice to SEHK Securities Trading Service Company and other overseas
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investors for liquidation of positions. SEHK Securities Trading Service Company
shall notify SEHK participants in a timely manner and require them to notify their
investors. Investors shall liquidate the excess shares within 5 Shenzhen Connect
trading days of receiving such notices.
Once the aggregate shareholding falls below the limit within 5 Shenzhen Connect
trading days as a result of other overseas investors’ voluntary reduction of holding,
SEHK Securities Trading Service Company may, on its own initiative or at the request
made to it through SEHK participants by Shenzhen Connect investors who have been
notified to reduce their shareholding, apply to the Exchange for allowing the original
shareholders to maintain their shareholding.
Article 48 In case that investors in the Shenzhen Connect fail to dispose of excess
shares pursuant to relevant regulations, SEHK Securities Trading Service Company
shall require relevant SEHK participants to liquidate such positions.
Chapter III Hong Kong Connect Trading
Section 1 Exchange Members’ Participation in Hong Kong Connect
Article 49 In order to participate in Hong Kong Connect, the Exchange members
shall meet the technical standards and other requirements prescribed by SZSE
Securities Trading Service Company.
Article 50 The Exchange members participating in Hong Kong Connect shall sign the
Hong Kong Connect service contract with SZSE Securities Trading Service Company
and define therein their respective rights and responsibilities.
Article 51 The Exchange rules governing its members’ management of clients’
trading activities are applicable to the Exchange members participating in Hong Kong
Connect.
Article 52 The Exchange members shall fully disclose to their clients the risks
involved in investment through Hong Kong Connect, procure that their clients comply
with applicable laws, administrative regulations, government department rules,
regulatory documents and operational rules of the Mainland and Hong Kong, and be
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subject to the supervision of the Exchange.
Article 53 The Exchange members may terminate the Hong Kong Connect service
contract with SZSE Securities Trading Service Company in accordance with relevant
agreements, provided however that they have made proper arrangements for their
clients.
Article 54 SZSE Securities Trading Service Company may agree with the Exchange
members that SZSE Securities Trading Service Company is entitled to suspend Hong
Kong Stock Connect service or terminate the Hong Kong Stock Connect service
contract if:
(1) The Exchange member breaches applicable laws, administrative regulations,
government department rules, regulatory documents or operational rules.
(2) The Exchange member fails to cooperate with the Exchange in the latter’s
inspections, investigations, or other regulatory actions regarding Hong Kong
Connect trading;
(3) The Exchange member is unable to provide Hong Kong Stock Connect trading
service for its clients due to major failures that occur in its relevant business or
technical systems; or
(4) Other circumstances prescribed in the agreement occur.
Article 55 SZSE Securities Trading Service Company may appoint the Exchange to
perform the relevant duties prescribed in these Measures on its behalf, but shall still
be liable for insufficient or inappropriate performance of such duties.
Section 2 Hong Kong Connect Shares
Article 56 The eligible shares for Hong Kong Connect include:
(1) The constituents of Hang Seng Composite LargeCap Index;
(2) The constituents of Hang Seng Composite MidCap Index;
(3) The constituents of Hang Seng Composite SmallCap Index with an average
month-end market capitalization of at least HKD 5 billion in the 12 months prior
to the deadline for periodic review of the index; or, if the constituent stock has
been listed within the 12 months prior to the periodic review of the relevant index,
its market capitalization at the time of listing shall be no less than HKD 5 billion;
and
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(4) SEHK-listed H shares of A+H companies that are dual-listed in the Mainland and
Hong Kong.
Shares listed in (1) to (4) of the previous paragraph shall not be included in Hong
Kong Connect if they are:
(1) H shares of A+H companies whose A shares are listed on the Exchange and have
been issued a risk alert by the Exchange, suspended from listing by the Exchange,
or have entered the pre-delisting period;
(2) H shares of A+H companies whose A shares are traded on the Risk Alert Board of
Shanghai Stock Exchange (hereinafter, SSE);
(3) SEHK-listed shares which are quoted and traded in currencies other than HKD; or
(4) Other shares recognized as special situations by the Exchange.
With the approved of the regulatory authority, the Exchange may adjust the scope of
eligible shares for Hong Kong Connect.
Article 57 Shares not included in Hong Kong Connect that fall within (1) to (4) of the
first paragraph of Article 56 but outside (1) to (4) of the second paragraph of Article
56 of these Measures as a result of the adjustment of constituent stocks of relevant
indices shall be included in Hong Kong Connect.
With respect to a company listed on the Exchange or the SSE (as A shares) that seeks
listing on the SEHK (as H shares), or of a company listed on the SEHK (as H shares)
that seeks listing on the Exchange or the SSE (as A shares), or a company that seeks
listing both in the Mainland (as A shares) and Hong Kong (as H shares) on the same
trading day, its H shares may be included in Hong Kong Connect after the company’s
H shares have passed the price stabilization period and its A shares have been listed
for 10 trading days.
Article 58 Hong Kong Connect shares that fall outside (1) to (4) of the first paragraph
of Article 56 or within (1) to (4) of the second paragraph of Article 56 of these
Measures as a result of the adjustment of constituent stocks of relevant indices shall
be excluded from Hong Kong Connect.
Article 59 The criterion of market capitalization for Hong Kong shares under (3) of
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the first paragraph of Article 56 hereof is only applied at the time of periodic review
of constituent stocks of Hang Seng Composite MidCap Index. The relevant shares are
included under or excluded from Hong Kong Connect on the date of periodic review.
The constituent stocks that meet the market capitalization threshold shall be
determined by the SEHK.
Article 60 SZSE Securities Trading Service Company shall publish the list of eligible
shares for Hong Kong Connect on the websites it designates, and the inclusion or
exclusion of the shares shall take effect at the time published by SZSE Securities
Trading Service Company.
Section 3 Trading-specific Matters
Article 61 Investors shall participate in the Hong Kong Connect trading through
RMB common stock accounts maintained with the Exchange.
Article 62 Hong Kong Connect shares are quoted in HKD and settled in RMB.
Article 63 The trading calendar and trading hours of Hong Kong Connect shares shall
be published by SZSE Securities Trading Service Company on the website it
designates. Trading hours on each Hong Kong Connect trading day include
pre-opening session, continuous trading session and closing auction session, subject to
SEHK’s regulation.
Upon the occurrence of any special circumstance as recognized by SZSE Securities
Trading Service Company that leads to or may lead to suspension of Hong Kong
Connect trading, SZSE Securities Trading Service Company may adjust the trading
calendar and trading hours of Hong Kong Connect, and make an announcement
accordingly.
Article 64 Hong Kong Connect trading is conducted through SEHK’s Automatic
Order Matching System, but odd lots held by investors can only be sold through
SEHK’s Semi-Automatic Order Matching and Execution System.
When trading through SEHK’s Automatic Order Matching System, investors shall
place at-auction limit orders during SEHK’s pre-opening session and closing auction
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session and enhanced limit orders during SEHK’s continuous auction session.
Article 65 The order size for Hong Kong Connect shares shall be governed by the
regulations of the SEHK.
Article 66 Shares excluded from Hong Kong Connect pursuant to Article 58 of these
Measures but still listed on the SEHK may be sold, but not to be purchased, through
Hong Kong Connect.
Article 67 Hong Kong Connect shares purchased by investors may be sold before
settlement on the same trading day once the execution is confirmed.
Article 68 The regulations governing the third-party depository of clients’ settlement
funds for trading A shares shall be applied mutatis mutandis to Hong Kong Connect
trading.
Article 69 The Exchange members shall ensure that their clients have sufficient RMB
funds or securities available in their accounts before accepting clients’ Hong Kong
Connect orders. They are prohibited from accepting any buy or sell order from those
who do not have sufficient securities available in their accounts.
Article 70 SZSE Securities Trading Service Company and the Exchange members
shall not match by themselves investors’ buy and sell orders for Hong Kong Connect
shares, and shall not, in any other forms, provide transfer services for Hong Kong
Connect shares at any venue other than the SEHK, save as otherwise prescribed by
the CSRC.
Article 71 Once the orders for Hong Kong Connect shares are placed, their prices or
sizes shall not be changed. However, during the order cancellation period permitted
by the SEHK, orders that are not executed may be cancelled.
Article 72 The Exchange members participating in Hong Kong Connect shall submit
orders to the SEHK through SZSE Securities Trading Service Company.
After receiving trading results and other records from the SEHK, SZSE Securities
Trading Service Company will send the same to the Exchange members, who will, in
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turn, send the same to their clients.
Article 73 Real-time quotations of Hong Kong Connect shares will be released by the
SEHK.
Without the permission of the SEHK, any Exchange member or other entity
recognized by the Exchange shall not disclose the transaction information licensed by
the SEHK to itself to any entity or individual other than their clients for use,
dissemination or for the development of indices or other products.
Article 74 The Exchange members shall properly keep instruction and order
placement records and other materials pursuant to relevant regulations.
Article 75 Investors participating in Hong Kong Connect trading shall pay
commissions to their appointed Exchange members pursuant to relevant regulations
and pay the relevant fees pursuant to regulations of the SEHK.
Article 76 Unless otherwise prescribed by the Exchange, the SEHK-listed securities
that are not included in Hong Kong Connect and are obtained as a result of equity
distribution or conversion of Shenzhen Connect shares, acquisition of listed
companies under Shenzhen Connect or the occurrence of any abnormal situation may
be sold, but not be purchased, through Hong Kong Connect.
SEHK-listed call warrants of SEHK-listed shares that are obtained as a result of rights
issue by Hong Kong Connect share issuers, or equity distribution or conversion of
Hong Kong Connect shares may be sold, but not be purchased, through Hong Kong
Connect. The exercise of such call warrants is governed by the relevant regulations of
the CSRC and the CSDC.
The non-SEHK-listed securities that are obtained as a result of equity distribution or
conversion of Hong Kong Connect shares, or acquisition of listed companies under
Hong Kong Connect are not allowed to be sold or purchased through Hong Kong
Connect.
Article 77 The Exchange may adjust the trading methods, order types, business scope,
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trading limits, etc. for Hong Kong Connect in line with market conditions.
Section 4 Quota Control
Article 78 SZSE Securities Trading Service Company shall monitor the usage of the
Hong Kong Connect daily quota on a real time basis and shall publish the same on the
designated website..
Article 79 The Hong Kong Connect daily quota balance is calculated as follows:
Daily Quota Balance = Daily Quota-Buy Orders + Sell Trades + Buy Orders
cancelled or Buy Orders rejected by the SEHK + Difference between the execution
prices and bid prices of buy orders.
The values of buy orders, sell trades, buy orders cancelled or buy orders rejected by
the SEHK, and the difference between the execution prices and bid prices of buy
orders as mentioned in the previous paragraph shall be converted from HKD to RMB
at the reference exchange rate provided by the CSDC before trading starts on each
trading day and be calculated in RMB.
Article 80 Once the Hong Kong Connect daily quota balance is used up during the
pre-opening session, SZSE Securities Trading Service Company will not accept
further buy orders till the end of such session, but still accept sell orders. Once the
Hong Kong Connect daily quota balance becomes positive due to cancellation of buy
orders, rejection by the Exchange of buy orders, or execution of sell orders, SZSE
Securities Trading Service Company will resume accepting subsequent Hong Kong
Connect buy orders when the SEHK continuous auction session starts.
Once the Hong Kong Connect daily quota balance is used up during the continuous
auction session or closing auction session, SZSE Securities Trading Service Company
will not accept further buy orders for the remainder of the day, but still accept sell
orders. In such case, SZSE Securities Trading Service Company will not resume
accepting buy orders for the remainder of the day, unless otherwise prescribed by the
Exchange.
Article 81 Investors are prohibited from using quota maliciously to affect quota
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control by placing large buy orders at low prices when participating in Hong Kong
Connect trading.
Section 5 Investor Suitability Management
Article 82 Institutional investors participating in Hong Kong Connect Trading shall
comply with laws, administrative regulations, government department rules,
regulatory documents and operational rules.
Article 83 In order to participate in Hong Kong Connect Trading, an individual
investor shall at least satisfy the following requirements:
(1) Holding no less than RMB 0.5 million in total assets in the securities and cash
accounts;
(2) Having no serious bad credibility record; and
(3) Not being prohibited or restricted from participating in Hong Kong Connect
trading by any laws, administrative regulations, government department rules,
regulatory documents or operational rules.
The Exchange may at its discretion adjust the aforesaid criteria depending on market
conditions.
Article 84 Investors participating in Hong Kong Connect trading shall be familiarize
themselves with relevant regulations of Hong Kong securities market, rules and
processes regarding Hong Kong Connect trading, set their investment targets taking
into account their risk preferences and conduct an objective assessment of their own
risk tolerance.
Article 85 The Exchange members shall formulate the standards, procedures and
methods for investor suitability management under Hong Kong Connect as well as the
safeguard measures for enforcement of the investor suitability system. Such standards
formulated by the Exchange members shall include but not be limited to investor’s
financial status, knowledge and risk tolerance.
Article 86 The Exchange members shall comprehensively and objectively describe
the laws and regulations and characteristics of Hong Kong securities market as well as
the rules and processes concerning Hong Kong Connect to the clients.
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Article 87 The Exchange members shall enter into a client agreement with their
clients that participate in the Hong Kong Connect trading and specify therein the
rights and obligations of both parties.
Before signing the client agreement, the Exchange members shall fully disclose the
risks associated with Hong Kong Connect trading to their clients, and require their
clients to sign the risk disclosure statement.
The essential provisions for the client agreement and the risk disclosure statement will
be formulated by the Exchange separately.
Chapter IV Handling of Extraordinary Circumstances
Article 88 Upon the occurrence of extraordinary circumstances recognized by the
Exchange that disable or may disable part or all of the trading activities under
Shenzhen Connect, the Exchange will have the discretion to impose such measures as
suspension of trading in Shenzhen Connect shares, suspension of acceptance of part
or all of the orders for Shenzhen Connect shares and temporary closure of the
Exchange market, and will make an announcement accordingly.
Upon the occurrence of extraordinary circumstances recognized by SZSE Securities
Trading Service Company that disable or may disable part or all of the trading
activities under Hong Kong Connect, SZSE Securities Trading Service Company will
have the discretion to suspend part or all of the Hong Kong Connect trading service,
and will make an announcement accordingly.
After the cause which leads to the imposition of trading suspension or temporary
market closure by the Exchange or leads to the suspension of Hong Kong Connect
service by SZSE Securities Trading Service Company ceases to exist, the Exchange
will have the discretion to resume the Shenzhen Connect trading and the Exchange
market, and will make an announcement accordingly. Similarly, SZSE Securities
Trading Service Company will have the discretion to resume the provision of Hong
Kong Connect service, and make an announcement accordingly.
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Article 89 When an extraordinary circumstance as defined in the operational rules of
the Exchange occurs in which the sale value or purchase value of Shenzhen Connect
shares exceeds a specified amount during a short period of time, the Exchange may
take relevant handling measures pursuant to relevant regulations.
Article 90 If, upon the occurrence of extraordinary circumstances recognized by the
SEHK that disable or may disable part or all of the trading activities under Hong
Kong Connect, the SEHK determines to temporarily close the market, resume trading
afterwards, or take other measures, the Exchange will forward the SEHK’s relevant
announcement upon receiving the latter’s notification.
Upon the occurrence of extraordinary circumstances recognized by SEHK Securities
Trading Service Company that disable or may disable part or all of the trading
activities under Shenzhen Connect, SEHK Securities Trading Service Company will
have the discretion to suspend the Shenzhen Connect service, and will make an
announcement accordingly. After the extraordinary circumstance ceases to exist,
SEHK Securities Trading Service Company will have the discretion to resume the
Shenzhen Connect service, and will make an announcement accordingly.
Article 91 The Exchange and SZSE Securities Trading Service Company shall not be
liable for any loss arising from or in connect with extraordinary circumstances or
from the relevant measures adopted by the Exchange and SZSE Securities Trading
Service Company to handle such circumstances.
Chapter V Self-regulation
Article 92 The Exchange and the SEHK will enhance supervision and regulation of
Shenzhen-Hong Kong Stock Connect trading and relevant information disclosure
through cross-border regulatory cooperation.
Article 93 The Exchange will, in accordance with the provisions of the Trading Rules
and other relevant rules, exercise intense monitoring on the unusual trading activities
and extraordinary circumstances that occur in Shenzhen Connect trading.
Article 94 When SEHK Securities Trading Service Company discovers any of the
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unusual trading activities or extraordinary circumstances in Shenzhen Connect trading
as enumerated in the Trading Rules or other rules, it shall notify the Exchange in a
timely manner, alert SEHK participants and require SEHK participants to alert their
clients, and, in accordance with specific circumstances, take such measures as
refusing to provide Shenzhen Connect service for SEHK participants.
SEHK Securities Trading Service Company shall, in a proper manner, require SEHK
participants to alert the clients to the unusual trading activities or possible unusual
trading activities as enumerated in the Trading Rules and other operational rules that
are conducted by the clients in Shenzhen Connect trading, and shall, in accordance
with specific circumstances, reject the client’s subsequent Shenzhen Connect orders.
Article 95 In case that there is a breach of these Measures or other relevant rules of
the Exchange in Shenzhen Connect trading, or a violation and possible violation by
Shenzhen Connect investors of information disclosure requirements prescribed in the
Rules Governing the Listing of Shares on Shenzhen Stock Exchange, the Rules
Governing the Listing of Shares on the ChiNext of Shenzhen Stock Exchange and
other operational rules, the Exchange may conduct an investigation and require SEHK
Securities Trading Service Company to provide relevant materials. The Exchange
may also request the SEHK to take appropriate investigative measures on the relevant
SEHK participants.
Article 96 In case that there is a serious breach of these Measures or other relevant
rules of the Exchange in Shenzhen Connect trading, the Exchange can request the
SEHK to impose relevant regulatory measures or disciplinary sanctions on its relevant
participants, or request the SEHK to ask its participants to issue a verbal or written
warning to the relevant investors and refuse to accept Shenzhen Connect orders from
such investors.
Article 97 Where the unusual trading activities or extraordinary circumstances that
occur in Shenzhen Connect trading have severely disrupted the orderly market of the
Exchange, the Exchange may suspend or restrict the trading authority of SEHK
Securities Trading Service Company, or refuse to accept trading orders submitted by
SEHK Securities Trading Service Company that involve the relevant investors.
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After the unusual trading activities or extraordinary circumstances cease to exist, the
Exchange will have the discretion to restore the trading authority of SEHK Securities
Trading Service Company or resume accepting relevant trading orders.
Article 98 Where Shenzhen Connect investors trade Shenzhen Connect shares in
violation of information disclosure requirements prescribed in the Rules Governing
the Listing of Shares on Shenzhen Stock Exchange, the Rules Governing the Listing of
Shares on the ChiNext of Shenzhen Stock Exchange and other operational rules, the
Exchange may impose regulatory measures or disciplinary sanctions on the investors
concerned pursuant to relevant regulations.
Article 99 Hong Kong Connect investors and the Exchange members shall not violate
provisions of these Measures or commit market misconduct when participating in
Hong Kong Connect trading.
Article 100 Upon discovery by the Exchange members of existing or potential market
misconduct by investors in Hong Kong Connect trading, the Exchange members shall
alert those investors and may also refuse to accept orders from those investors. The
Exchange members shall also report the case to the Exchange in a timely manner.
Article 101 Upon the request of the SEHK or when the Exchange considers necessary,
the Exchange may conduct both on-site and off-site investigations into market
misconduct or other irregular activities that occur in Hong Kong Connect trading and
require the relevant Exchange members and the clients concerned to submit relevant
materials. Such materials can also be made available to the SEHK.
Article 102 Where the Exchange members and their clients commit serious market
misconduct in Hong Kong Connect trading, at the request of the SEHK, the Exchange
may impose regulatory measures or disciplinary sanctions on the Exchange members
and their clients, including requiring the Exchange members to reject Hong Kong
Connect trading orders from the clients concerned.
Article 103 When necessary, the Exchange may conduct inspections on the risk
management measures and the safe operation of technical systems of SEHK
Securities Trading Service Company as well as the implementation of the relevant
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rules of the Exchange by SEHK Securities Trading Service Company.
Article 104 Where SEHK Securities Trading Service Company violates these
Measures or other relevant regulations of the Exchange, the Exchange may impose
regulatory measures or disciplinary sanctions including verbal and written warnings,
summoning the parties concerned for talks, circulation of notice of criticism and
public censure, etc.
Article 105 Where the Exchange members and their clients violate these Measures or
other relevant regulations of the Exchange, the Exchange may impose regulatory
measures or disciplinary sanctions including verbal and written warnings, summoning
the parties concerned for talks, circulation of notice of criticism and public censure,
etc.
Article 106 Where Shenzhen Connect investors, Hong Kong Connect investors,
SEHK Securities Trading Service Company or the Exchange members seriously
violate applicable laws, administrative regulations, government department rules,
regulatory documents or the Exchange rules when participating in Shenzhen-Hong
Kong Stock Connect, the Exchange may report to the CSRC for investigation and
punishment.
Article 107 The Exchange may completely or partially suspend Shenzhen-Hong
Kong Stock Connect trading in accordance with applicable laws, administrative
regulations, government department rules, regulatory documents and rules, or upon
the request of the regulatory authority.
Article 108 The Exchange shall not be liable for any loss arising from or in
connection with its formulation or revision of its rules or from its performance of
self-regulatory duties under the operational rules.
The Exchange members and Hong Kong Connect investors shall be aware of and
acknowledge the relevant provisions in SEHK rules regarding exemption of the
SEHK from liability.
Chapter VI Supplementary Provisions
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Article 109 The following terms in these Measures shall have the meanings given
below:
(1) Shenzhen-Hong Kong Stock Connect: A mutual market access mechanism
between Shenzhen and Hong Kong stock markets by which investors in the
Mainland and Hong Kong may appoint the Exchange members and SEHK
participants to trade designated shares listed in the other’s market through the
securities trading service companies established by the Exchange and SEHK in
Hong Kong and the Mainland, respectively. The Shenzhen-Hong Kong Stock
Connect includes Shenzhen Connect and Hong Kong Connect.
(2) Shenzhen Connect: Investors appoint SEHK participants to trade designated
SZSE-listed shares by sending orders to the Exchange through SEHK Securities
Trading Service Company.
(3) Hong Kong Connect: namely Hong Kong Connect under Shenzhen-Hong Kong
Stock Connect, investors appoint the Exchange members to trade designated
SEHK-listed shares by sending orders to the SEHK through SZSE Securities
Trading Service Company.
(4) Shenzhen Connect Shares: The SZSE-listed shares within the prescribed scope
that are available for trading by investors through Shenzhen Connect.
(5) Hong Kong Connect Shares: The SEHK-listed shares within the prescribed scope
that are available for trading by investors through Hong Kong Connect.
(6) Shenzhen Connect Investors: Investors who appoint SEHK participants to trade
Shenzhen Connect shares or who trade Shenzhen Connect shares directly through
Shenzhen Connect.
(7) Hong Kong Connect Investors: Investors who appoint the Exchange members to
trade Hong Kong Connect shares or who trade Hong Kong Connect shares
directly through Hong Kong Connect.
(8) Trading Day: The trading day of the Exchange.
(9) Shenzhen Connect Trading Day: Trading day for Shenzhen Connect share as
announced by SEHK Securities Trading Service Company.
(10) Hong Kong Connect Trading Day: Trading day for Hong Kong Connect shares as
announced by SZSE Securities Trading Service Company.
(11) Exchange Member: The securities company that has obtained the regular
membership of Shenzhen Stock Exchange.
(12) SEHK Participant: The Exchange Participant (EP) as defined in the SEHK Rules
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of the Exchange.
(13) The Deadline for Periodic Review: In the case of Shenzhen Connect shares, the
deadline for periodic review of the relevant index as defined in compilation
methodologies of SZSE Component Index and SZSE Small/Mid Cap Innovation
Index; in the case of Hong Kong Connect shares, the deadline for periodic review
of the data used as defined in the methodology of Hang Seng Composite Index;
(14) A Share: RMB common shares listed on SZSE or SSE.
(15) H Share: Shares that issued by companies registered in the Mainland and are
listed on SEHK.
(16) A+H Companies: Companies registered in the Mainland with shares listed both
on the Exchange and SEHK or both on SSE and SEHK.
(17) SSE Risk Alert Board: the risk alert board launched by SSE for the shares of
listed companies that are put under risk alert.
(18) At-auction Limit Order Instruction: Appointment of the Exchange members by
investors to place at-auction limit orders as defined in the SEHK rules for Hong
Kong Connect trading.
(19) Enhanced Limit Order Instruction: Appointment of the Exchange members by
investors to place enhanced limit orders as defined in the SEHK rules for Hong
Kong Connect trading.
(20) Odd Lot: The amount of a security that is less than one normal unit of trading.
(21) Price stabilization period: The price stabilization period of a particular stock as
stipulated in its prospectus.
(22) Margin Trading under Shenzhen Connect: The purchase of Shenzhen Connect
shares by Shenzhen Connect investors using the cash obained through securities
margin financing in Hong Kong stock market.
(23) Covered Short Selling under Shenzhen Connect: The sale of Shenzhen Connect
shares via Shenzhen Connect that are borrowed by Shenzhen Connect investors
through share lending in Hong Kong stock market.
(24) Share Lending under Shenzhen Connect: The lending of Shenzhen Connect
shares by SEHK participants to their clients or other SEHK participants, or the
lending of Shenzhen Connect share by eligible institutions to SEHK participants
in Hong Kong stock market.
(25) Covered Short Selling Ratio of Shenzhen Connect Shares: The ratio of covered
short selling volume of a single Shenzhen Connect stock during a single Shenzhen
Connect trading day to the total number of shares of such stock held by HKSCC
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as a nominee on the previous Shenzhen Connect trading day.
(26) Non-trading Transfer of Shenzhen Connect Shares: The change of beneficial
owner of Shenzhen Connect shares through any means other than trading on the
Exchange market.
(27) Rights Issue: SEHK-listed companies offer their existing shareholders the rights
to subscribe for new shares in proportion to their existing holding. The
subscription rights are transferable in the secondary market.
(28) Open Offer: SEHK-listed companies make an offer to the existing shareholders to
subscribe for new shares. However, entitlements from an open offer are not
transferable.
(29) Market Misconduct: Insider dealing, false trading, price rigging, disclosure of
information about prohibited transactions, disclosure of false or misleading
information inducing transactions, stock market manipulation and other forms of
market misconduct as defined by Hong Kong laws, the SFC and the SEHK.
Article 110 Institutions that rent marketing units from the Exchange members for
participation in Hong Kong Connect shall enter into a Hong Kong Connect service
contract with SZSE Securities Trading Service Company and shall be governed by the
relevant regulations applicable to the Exchange members regarding participation in
Hong Kong Connect, except the part concerning the Exchange members’ brokerage
business.
Non-brokerage business such as proprietary business and asset management business
of the Exchange members, and the institutions identified in the above paragraph shall
meet the relevant requirements of the relevant regulatory authorities when involved in
Hong Kong Connect
Article 111 Information disclosure by Shenzhen Connect share issuers and Hong
Kong Connect share issuers as well as relevant persons with disclosure obligations
shall be subject to the supervision of local exchanges where the shares are listed and
be governed by the applicable laws, administrative regulations, government
department rules and regulatory documents of the jurisdiction where the shares are
listed as well as the rules of the exchange.
Article 112 HKSCC shall not be subject to the Exchange regulations on disclosure of
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equity changes of listed companies even if the change of equity in Shenzhen Connect
shares held by HKSCC as a nominee reaches the threshold for equity changes of listed
companies.
Article 113 Shenzhen Connect investors can have access to the information disclosed
by Shenzhen Connect share issuers and relevant persons with disclosure obligations
on the Exchange website and through other information disclosure media designated
by the CSRC.
Article 114 Hong Kong Connect investors can have access to the information
disclosed by Hong Kong Connect share issuers and relevant persons with disclosure
obligations on the website HKEXnews and the websites of relevant issuers.
Article 115 HKSCC shall, in its own name, exercise the rights to Shenzhen Connect
share issuers as per the instruction of Shenzhen Connect investors.
Specific regulations on HKSCC’s participation as a nominee in online voting at
shareholders’ general meetings of SZSE-listed companies shall be formulated by the
Exchange separately.
Article 116 When SZSE-listed companies make rights issues to Shenzhen Connect
investors with the approval of the regulatory authority, HKSCC will participate in the
subscription as a nominee subject to the Exchange’s regulations on share issuance and
subscription.
The specific matters relating to Hong Kong Connect investors’ participation in the
subscription for rights issues or open offers made by SEHK-listed companies to Hong
Kong Connect investors with the approval of the regulatory authority shall be
governed by the relevant regulations of the CSRC and the CSDC.
Article 117 Investors shall comply with the investor suitability regulations and
operational rules applied in Hong Kong market when participating in the trading on
the SZSE ChiNext market through Shenzhen Connect.
Article 118 Custody transfer is allowed concerning the Hong Kong Connect shares
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purchased by investors. The specific matters relating to custody transfer shall be
governed by the relevant regulations of the CSDC.
Article 119 Regulations governing the specific matters relating to the margin trading
and securities lending services provided by the Exchange members for Hong Kong
Connect trading will be formulated by the Exchange separately.
Article 120 Where the relevant regulatory authority has other provisions on the settlement
currency of Shenzhen-Hong Kong Stock Connect, such provisions shall prevail.
Article 121 Matters concerning the trading, shareholding limit, exercise of
shareholder’s rights and information disclosure of the securities that can only be sold
but not purchased through Shenzhen-Hong Kong Stock Connect under these
Measures shall be governed mutatis mutandis by the provisions in these Measures
governing Shenzhen Connect shares and Hong Kong Connect shares.
Article 122 The terms “exceed”, “more than”, “lower than” and “less than” in these
Measures do not include the given figures, whereas the terms “reach” and “below”
include the given figures.
Article 123 These Measures and any amendment hereto shall be subject to the
approval of the CSRC after being adopted by the board of directors of the Exchange.
Article 124 The power to interpret these Measures shall rest with the Exchange.
Article 125 These Measures shall take effect on September 30, 2016.