The Hong Kong’s Securities and Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) have announced that signing of a Memorandum of Understanding (MoU) which is aiming to launch a pilot program for the establishment of mutual access between the Shanghai and the Hong Kong stock markets.
According to the announcement the project is dubbed the Shanghai-Hong Kong Stock Connect and consists of a Northbound Trading Link and a Southbound Trading Link. The parties have also agreed that the effort will require enhancement of investor protection and facilitation of the development of effective operations on both stock markets.
In addition to the launch of this program, the regulatory bodies have agreed to strengthen their efforts for cooperation in order to improve their efforts to identify misconduct and conduct effective investigations across their respective jurisdictions.
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The parties have agreed on a framework for establishing an exchange of alerts and information related to investigations. The SFC and the CSRC will be notifying and alerting each other about suspected misconduct and investigations. Documentary evidence, witness statements, interview records and others will be mutually available to both regulators.
Meanwhile one of the leading clearing and settlement providers for global financial markets, Dion Global, has announced the enhancement of its coverage to cater to the forthcoming Shanghai-Hong Kong trading connector that aims to bolster China’s financial trading environment.
The move comes at a time when escalating tension in Hong Kong is leading to some worrisome developments which triggered a selloff on the local stock market. The commitment of the Chinese leadership towards intertwining Hong Kong with mainland China remains undeterred as the path forward has been chosen quite a while ago.
Combining the Shanghai and Hong Kong stock exchanges will create a very powerful entity and serve a message to the global investor community about where is China going in its reform policies – forward.