HONG KONG: Hong Kong Exchanges and Clearing Limited to Enhance its Services for Stock Connect

Thursday March 26 2015

Hong Kong Exchanges and Clearing Limited (HKEx) is rolling out a significant enhancement to its Central Clearing and Settlement System (CCASS) on 30 March 2015 (Monday) to enable investors to settle their trades of A shares (Northbound trades) through Shanghai-Hong Kong Stock Connect (Stock Connect) similarly to the way they settle their trades of Hong Kong stocks.

The new service will allow investors to open Special Segregated Accounts (SPSAs) in CCASS via its Custodian Participants or its General Clearing Participants (GCPs) which are not Exchange Participants (EPs). This new feature will address investors’ biggest concern by enabling them to meet Stock Connect’s pre-trade checking requirement for A shares without transferring their shares before they sell them. Investors will only be required to transfer shares they are selling to their broker for settlement after their sell orders are executed. Under the current arrangements, A shares must be transferred for pre-trade checking before they can be sold.

In order to allow time for Custodian Participants, non-EP GCPs and executing brokers to set up SPSAs for their clients, the pre-trade tracking mechanism based on the SPSA model will be launched on 20 April 2015.

There are also new Rule amendments, which will become effective on 30 March 2015, to clarify the role of Hong Kong Securities Clearing Company Limited, a wholly owned subsidiary of HKEx, as the nominee holder of A shares under Stock Connect.

Click on the link above for further details.