Shanghai-Hong Kong Stock Connect
Shanghai-Hong Kong Stock Connect (“SH-HK Stock Connect”) launches at 17th Nov 2014. Core Pacific-Yamaichi (“CPY”) would by then provide you with services to trade Shanghai A shares through PC download version, mobile app, your designated Account Executive and online trading platform. Please find below a brief summary of details relating to SH-HK Stock Connect.
A. Trading Rules for SH-HK Stock Connect
Trading Rules
Trading Hours

Opening Call Auction: 09:15–09:25
Continuous Auction: 09:30–11:30 / 13:00–15:00
Allow order input 5 minutes prior to opening of each trading session

Settlement Cycle

Securities settlement: Trade day
Money settlement: T+1

Currency

Trading and settlement: RMB

Price Limit

± 10% on previous closing price
Any orders with price beyond the price limit will be rejected

Trading

No day trades
No block trades
No trading by designated broker
No naked short selling

Orders

Limit orders only

Fees & Levies

Existing fees and levies applicable to A share market:#
» Handling Fee:0.00487%
» Securities Management Fee:0.002%
» Seller Stamp Duty: 0.1%
» 0.004% of the amount of the consideration for each purchase or sale
Portfolio fee for depository and nominee services for A shares

# Details please refer to our service charges
Charges

B. Points to note to trade SSE Securities (SH-HK Connect)

    1. SSE A-shares can be traded through PC download version, mobile app, web online and simply call your account executive.

    2. Only Cash account is allowed to trade A Shares, Margin account is unable to trade A Shares.

    3. The order is only valid within trading hour. Non executed order will be cancelled after market close.

    4. A share market does not accept day trade.

    5. SH-HK Stock Connect does not accept order amendment. Client can only cancel the original order and then input a new order.

    6. Northbound trading will follow SSE’s trading hours. However, SEHK will accept Northbound orders from EPs five minutes before the Mainland market session opens in the morning and in the afternoon i.e. 09:10–09:15; 09:25–09:30; 12:55–13:00. Orders and order cancellations can be accepted by SEHK but will not be processed by SSE until SSE’s market open. Client need to pay attention to the cancel order cannot be cancelled as the order is executed if input cancel order in mentioned period.

    7. The holidays schedule of Shanghai A share market and SH-HK Stock Connect is different and there is the trading quota of SH-HK Stock Connect. Also, there is the risk that Shanghai A share market is open but not for SH-HK Stock Connect. (Please refer to Holding table and Northbound Quota on the website of HKEx)

    8. Client with margin account can only trade marginable SSE Securities. Cash account will not be limited by this rule.

    9. SSE Securities are issued in scripless form. Physical deposits and withdrawals of SSE Securities into/from the CCASS Depository will not be available.

C. Details of CPY’s RMB Bank Accounts
Bank Core Pacific-Yamaichi International (H.K.) Limited
Bank of China 012-875-9-250310-4
HSBC 808-847784-285
Standard Chartered Bank 447-1776373-3
D. Cross-boundary Investment Quota

The Northbound Aggregate Quota balance will be published on HKEx website after SSE’s market close. Daily Quota balance will be disseminated on HKEx

websit (http://www.hkex.com.hk/chi/market/sec_tradinfra/chinaconnect/chinaconnect_c.htm);
at 1-minute intervals and through CCOG and OMD Index Feed at 5-second intervals.


Northbound Quota
Aggregate Quota

Not Available

Daily Quota

RMB52 billion

Calculated Real‐Time during trading hours
Balance : Daily Quota –Buy Orders Sell Trades + Adjustments (e.g. Buy Order cancelled, Buy Order rejected by SSE, Buy Order executed at a better price)

If Daily Quota balance ≤ 0: » During opening call auction (Pre-opening): Reject new buy orders until quota balance becomes positive (e.g. due to Buy Order cancellation)
» During continuous auction (continuous trading):Suspend buy order for the remaining of the day
» Buy orders already input before suspension will not be affected

E. Comparison of A share (related to SH-HK connect) and HK stock trading
Comparison of A share (related to SH-HK connect) and HK stock trading
  A share (SH-HK connect) HK stock
Trading hours

9:30am-11:30am
1:00pm-3:00pm

9:30am-12:00am
1:00pm-4:00pm

Board lot size

100 shares per lot

Subect to the specific stock

Upper limit for Order size

1,000,000 shares

3,000 lots

Price Limit

± 10% on previous closing price
Any orders with price beyond the price limit will be rejected (Price Limit for (±5% for ST and *ST stock)

No limit

Tick size

RMB 0.01

Subject to the stock price

Day Trade

Not allowed
(stocks purchased on T day can only be sold on or after T+1 day)

Allowed

Odd lot trade

For sell order only

For both buy and sell order
(the price of odd lot trade may be lower)

Settlement cycle

Securities settlement: Trade day
Money settlement: T+1 day

Securities settlement: T+2 day
Money settlement: T+2 day

Fee

Handling Fee, Securities Management Fee, Seller Stamp Duty, Transfer Fee and Portfolio fee

Transaction Levy ,Trading Fee ,Stamp Duty, CCASS Stock Settlement Fees Trading Tariff

Language of Corporation action notice

Simplified chinese only
(SHEx's Website and 4 officially designated newspapers)

English and traditional chinese
(HKEx's website)

Physical deposits and withdrawals

Not allowed (in scripless form)

Allowed (for most of the stocks)

Stock Code

6 digits

5 digits

F. Disclosure obligations of SSE securities

According to the Law of the PRC on Securities, when an investor holds or controls up to 5% of the issued shares of a Mainland listed company, the investor is required to report in writing to the CSRC and the relevant exchange, and inform the listed company within three working days. The investor is not allowed to continue purchasing or selling shares in that listed company during the three days.

For such investor, every time when a change in his shareholding reaches 5%, he is required to make disclosure (in the same manner as mentioned above) within three working days. From the day the disclosure obligation arises to two working days after the disclosure is made, the investor may not buy or sell the shares in the relevant Mainland listed company.

If a change in shareholding of the investor is less than 5% but results in the shares held or controlled by him falling below 5% of the relevant Mainland listed company, the investor is required to disclose the information within three working days.

G. Foreign shareholding restriction on SSE Securities

Under current Mainland rules, unless otherwise permitted by the relevant strategic investor regulations, a single foreign investor's (i.e. QFII and RQFII) shareholding in a listed company is not allowed to exceed 10% of the company's total issued shares, while all foreign investors' shareholding in the A shares of a listed company is not allowed to exceed 30% of its total issued shares.

    When the aggregate foreign shareholding of an individual A share reaches 26%, SSE will publish notices on its website(http://www.sse.com.cn/disclosure/diclosure/qfii) If aggregate foreign shareholding exceeds the 30% threshold, the foreign investors concerned will be requested to sell the shares on a last-in-first-out basis within five trading days.

    SSE Securities purchased through Shanghai-Hong Kong Stock Connect will be considered in totality with those purchased by QFII and RQFII, and be subject to the same foreign shareholding restriction. Once SSE informs SEHK that the aggregate foreign shareholding of an SSE Security reaches 28%, further Northbound buy orders in that SSE Security will not be allowed, until the aggregate foreign shareholding of that SSE Security is sold down to 26%. If the 30% threshold is exceeded due to Shanghai-Hong Kong Stock Connect, HKEx will identify the relevant EP and require it to follow the forced-sale requirements.

    HKEx will publish a notification on its website to inform the market about suspension of buy orders if the shareholding limit goes beyond 28% and about the resumption of buy orders if the shareholding drops below 26%.

    Foreign investors can continue to sell the A share which aggregate foreign shareholding has reached the 30% threshold. If such selling activities cause the aggregate foreign shareholding to drop below the 30% threshold within 5 trading days, EPs who were subject to the forced-sale requirement may submit application to the SEHK for forced-sale exemption. EPs should monitor their clients' shareholdings in SSE Securities and remind their clients to comply with the 10% single foreign investor's restriction, and forced-sale arrangement.

H. Compliance with applicable laws in Mainland China

    Clients must comply with the Shanghai Stock Exchange rules, mainland China's laws and regulations of trading at China Connect Securities

    Clients must acknowledges and understand the risks associated with investing in China Connect Securities through appropriate arrangements including, without limitation, the risk that their instructions to trade in China Connect Securities may not be accepted and that they may be liable to regulatory investigations and the relevant legal consequences if they are in breach of or fail to comply with the SSE Rules and the laws and regulations referred to SEHK Rule 14A10;

    Clients must acknowledge that the Exchange has the power not to extend the China Connect Service to them and the power to require China Connect Exchange Participants not to accept instructions from them, if it is found that you (as the case may be) has or may have committed any abnormal trading conduct set out in or fail to comply with the SSE Rules and the laws and regulations referred to SEHK Rule 14A10(1);

    Clients must acknowledge that if the SSE Rules are breached, or if the disclosure and other obligations referred to in the SSE Listing Rules or the SSE Rules are breached, SSE has the power to carry out investigations, and may, through the Exchange or the SEHK Subsidiary, require China Connect Exchange Participants to provide relevant information and materials (including the information and personal data of their clients and other persons referred to SEHK Rule 537) to assist in its investigation;

    Clients must acknowledge that where there is a serious breach of the SSE Rules, SSE may request the Exchange to take appropriate regulatory actions or commence disciplinary proceedings against China Connect Exchange Participants, or request the Exchange to require China Connect Exchange Participants to issue warning statements (verbally or in writing) to you, and not to extend the China Connect Service to you;

    Clients must acknowledge that the Exchange may (for the purpose of assisting SSE in its regulatory surveillance of the SSE Market and enforcement of the SSE Rules and as part of the regulatory cooperation arrangement between the Exchange, the SEHK Subsidiary and SSE), at the request of SSE, require China Connect Exchange Participants to provide information concerning you and other persons referred to SEHK Rule 537 with respect to any China Connect orders input or China Connect Securities Trades made or entered into by China Connect Exchange Participants on their behalf; and

    Clients must understand that China Connect Exchange Participants shall authorize the Exchange (whether directly or through the SEHK Subsidiary) to disclose, transfer and provide information and personal data concerning clients and other persons referred to SEHK Rule 537 to SSE upon request and shall make appropriate arrangements (including obtaining the relevant consents) to ensure that the relevant information and personal data may be disclosed, transferred and provided in compliance with applicable laws including the Personal Data (Privacy) Ordinance.

I. Q & A session

1. What is Shanghai-Hong Kong Stock Connect trading ?

    Shanghai-Hong Kong Stock Connect is a securities trading and clearing links program developed by Hong Kong Exchanges and Clearing Limited (“HKEx”), Shanghai Stock Exchange (“SSE”) and China Securities Depository and Clearing Corporation Limited (“ChinaClear”), aiming to achieve a breakthrough in mutual market access between Mainland China and Hong Kong.

    Through Shanghai-Hong Kong Stock Connect, Hong Kong and foreign investors can trade SSE Securities (“Northbound Trading”) while Mainland investors can trade certain SEHK securities (“Southbound Trading”).

2. How to trade Shanghai A share though CPY Online trading platform ?

    Client can trade Shenzhen Stock Exchange Securities though our PC download version, mobile app, Online trading platform or simply call your account executive.

    Client who opened a valid securities account can trade Shanghai A share.

    CPY Online Trading platform:

    a. Login your securities account at www.cpetrade.com

    b. Choose A share at the section of securities trading

    c. Input the order information and click the “stock search” to find the stock name for the order

    d. Click the icon “Submit” to send the order to market

3. What should I pay attention for trading at Shanghai-Hong Kong Connect ?

    Only Limit orders are accepted.

    Order is only valid at same day. All non executed order will be cancelled after market close.

    There is no day trade for A share market.

    Change order is not accepted for Shanghai A share. You have to cancel it and replace a new order.

4. Is there any regulation for cancellation of trade ?

    HKEx will open the function for order entry at SEHK before 5 minutes of the morning and afternoon session but the order will be sent to market at market open (9:15am, 9:30am and 1pm).

    Therefore, new order or cancel order will be accumulated and wait at the system.

    For example, client want to cancel the order at 12:55 to 13:00, the cancel order will not be sent to market until market open as the regulation of SEHK.

    Client need to pay attention that the order may not be cancelled when the order have already executed when market open.

5. What is the settlement cycle of trading Shanghai –Hong Kong Connect ?

    The settlement cycle follows the regulation of A share market.

    Securities settlement: T

    Money settlement: T+1

6. Are we protected by the Investor Compensation Fund ?

    Investor should be noted that the current Investor Compensation Fund will not cover any Northbound activities.

7. Any Disclosure obligation for trading at Shanghai A share market ?

    There are the boundaries of the disclosure of the A-share interests in Hong Kong the same as the 5% with Mainland and it need to be disclosed within 3 days. According to the mainland regulations, investors cannot trade the underlying stock within the date of disclosure and two days after disclosure, i.e. investors may not trade the underlying stock at the longest of 5 days.

8. Any Market risk for trading at Shanghai A share market ?

    Shanghai-Hong Kong Stock Connect will only operate on days when both markets are open for trading and banking services are available in both markets on the corresponding settlement days. So it is possible that there are occasions when it is a normal trading day for the Mainland market but Hong Kong investors cannot carry out any A-share trading. Investors should take note of the days Shanghai-Hong Kong Stock Connect is open for business and decide according to their own risk tolerance capability whether or not to take on the risk of price fluctuations in A-shares during the time when Shanghai-Hong Kong Stock Connect is not trading.

9. How would SSE Securities under Shanghai-Hong Kong Stock Connect be customized for Hong Kong and overseas investors ?
Can investors hold SSE Securities acquired through Shanghai-Hong Kong Stock Connection physical form ?

    Since SSE Securities are issued in scripless form, physical deposits and withdrawals of SSE Securities into/from the CCASS Depository will not be available. As explained above, Hong Kong and overseas investors can only hold SSE Securities through their brokers/custodians. Their ownership of such is reflected in their brokers/custodians' own records such as client statements.

10. Any limitation for Odd Lots trading of Shanghai-Hong Kong Connect ?

    All SSE Securities are subject to the same trading board lot size, which is 100 shares (buy orders must be in board lot). Odd lot trading is only available for sell orders and all odd lots should be sold in one single order. It is common that a board lot buy order may be matched with different odd lot sell orders, resulting in odd lot trades. It should be noted that unlike Hong Kong, board lot and odd lot orders are both matched on the same platform on SSE, and subject to the same share price. The maximum order size is 1 million shares and the tick size is uniformly set at RMB 0.01.

11. Can I engage in short selling of A shares though Core Pacific Yamaichi ?

    No. Short selling service of A shares is not currently provided. Clients should confirm that sell orders placed are long sales and not short sales. Clients also need to ensure the sufficiency of shares before placing sell orders.

12. If my SSE shares has entered into a “Delisting Preparatory Period”, what will be the risk ?

    The “Delisting Preparatory Period” will usually has 30 trading days. During that period, investor who wishes to sell the shares through stock connect, it may only be able to do so on or before the end of the “Delisting Preparatory Period”. The shares are eligible for sell only during the period. Upon completion of “Delisting Preparatory Period”, HKSCC may cease to provide any services related to the shares, transfer and physical withdrawal of the shares will not be available. Investor should be aware of the risk related and other limitations. For details, please kindly contact HKSCC for enquiry.

13. Where can I obtain more information about Shanghai-Hong Kong Stock connect ?

    You can refer to HKEx website:

    Trading Information:

    http://www.hkex.com.hk/Mutual-Market/Stock-Connect?sc_lang=en

    Information Book for Investors:

    https://www.hkex.com.hk/-/media/HKEX-Market/Mutual-Market/Stock-Connect/Getting-Started/Information-Booklet-and-FAQ/Information-Book-for-Investors/Investor_Book_En.pdf

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