China News Service, Beijing, May 27 (Reporter Chen Kangliang) In order to further deepen the interconnection mechanism of stock market transactions between the mainland and Hong Kong (hereinafter referred to as the interconnection) and promote the common development of the capital markets of the two places, the China Securities Regulatory Commission and the Hong Kong Securities Regulatory Commission released on the 27th. The joint announcement, in principle, agrees that the two exchanges will include eligible exchange-traded funds (hereinafter referred to as ETFs) into the interconnection.
According to the announcement, after the ETF is included in the interconnection, mainland and Hong Kong investors can buy and sell stocks and ETF fund shares listed on each other's exchanges within the prescribed scope through local securities companies or brokers.
The ETF is included in the interconnection based on the infrastructure connection of the stock interconnection. The main institutional arrangements refer to the stock interconnection and follow the current fund operation, transaction settlement laws and regulations and operation modes of the two places.
Other institutional arrangements are as follows:
Regarding investment targets, the two parties will determine eligible mainland ETFs and Hong Kong ETFs to be included in the scope of targets based on the principles of fund size and index-tracking stock selection based on interconnected target stocks.
Detailed conditions will be published by the two exchanges.
With the approval of the Mainland China Securities Regulatory Commission and the Hong Kong Securities Regulatory Commission, the two exchanges may adjust the scope of inclusion under the framework of stock interconnection according to the operating conditions.
Regarding the investment method, investors invest in ETFs through the interconnection and interoperability, which can only be traded in the secondary market, and purchase and redemption are not allowed.
Regarding the investment quota, the ETF investment quota and the stock investment quota are calculated and managed together.
The two exchanges and registration and settlement institutions will formulate, publish or adjust and improve relevant business rules, and actively promote the development and testing of technical systems, investor education and other preparations, the announcement said.
Only after relevant transaction settlement rules and systems have been prepared, all relevant regulatory approvals have been obtained, market participants have fully adjusted their business and technical systems, and all required cross-border regulatory enforcement cooperation arrangements and investor education have been in place. ETFs are included in Connectivity.
From the date of this joint announcement to the official implementation of the above plan, it will take about 2 months to prepare, and the official implementation time will be announced separately.
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