Shanghai-Hong Kong Stock Connect

UOB Kay Hian is among the first batch of brokers to provide the Shanghai-Hong Kong Stock Connect trading service

Under Shanghai-Hong Kong Stock Connect, the Stock Exchange of Hong Kong Limited (SEHK) and Shanghai Stock Exchange (SSE) will establish mutual order-routing connectivity and related technical infrastructure to enable investors from respective markets to directly access the other market.

In view of this, you will enjoy the following:
Trade A-shares on our internet and mobile trading platform, UTRADE
   
Access to both Hong Kong & Shanghai markets with one account
   
Real-time streaming service for Shanghai-Hong Kong Connect
   
Margin facilities with attractive interest rates for numerous A-shares and Hong Kong stocks
   
A-shares market reports from our team of professional analysts
   
A series of investment seminars covering the latest analysis of the two markets
   

What is Shanghai-Hong Kong Stock Connect?

Shanghai-Hong Kong Stock Connect is a securities trading and clearing links programme to be 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 the Mainland and Hong Kong. Under Shanghai-Hong Kong Stock Connect, The Stock Exchange of Hong Kong Limited , a wholly-owned subsidiary of HKEx, and SSE will establish mutual order-routing connectivity and related technical infrastructure to enable investors of their respective market to trade designated equity securities listed in the other’s market.

Advantages of Northbound Trading Link

  • Convenience - Access to Shanghai market without opening a Mainland account.
  • Efficiency
    • HKEx subsidiaries are responsible for trading, clearing and settlement
    • All fund transfers are in Hong Kong
  • Participate in growth of the most exciting emerging economy – China
  • Diversify investment portfolio with shares from China market
    • Programme covers a wide range of SSE A shares
  • New opportunities to invest with RMB
    • Trading and settlement in RMB

For more details, please visit the HKEx website or The Page of Shanghai - Hong Kong Stock Connect.

What can we trade under Shanghai-Hong Kong Stock Connect?

SSE Securities for trading by Hong Kong and overseas investors, i.e. “Northbound Trading” Among the different types of SSE-listed securities, only A shares will be included in Shanghai-Hong Kong Stock Connect in the initial stage. Other product types such as B shares, Exchange Traded Funds (“ETF”s), bonds, and other securities will not be included.
The eligible securities include all the constituent stocks from time to time of the SSE 180 Index and SSE 380 Index, and all the SSE-listed A shares that are not included as constituent stocks of the relevant indices but which have corresponding H shares listed on SEHK, except the following:
(a)SSE-listed shares which are not traded in RMB; and
(b)SSE-listed shares which are included in the “risk alert board”.
Click here for full list of the available SSE securities

In what situation may the SSE be restricted from further buying (But available for selling) ?

Investors will only be allowed to sell an SSE Security but restricted from further buying if:
(a) the SSE Security subsequently ceases to be a constituent stock of the relevant indices; and/or
(b) the SSE Security is subsequently under “risk alert”; and/or
(c) the corresponding H share of the SSE Security subsequently ceases to be traded on SEHK, as the case may be

When the corresponding H share of an SSE Security is suspended from trading on SEHK, is investors allowed to further buy and/or sell the SSE Security which remains active on?

Investors can continue to buy and sell the SSE Security which are not suspended from trading on SSE.

Is there a quota?

Trading under Shanghai-Hong Kong Stock Connect will, initially, be subject to a maximum cross-boundary investment quota (i.e., Aggregate Quota), together with a Daily Quota.
The Northbound Aggregate Quota is set at RMB 300 billion. The Southbound Aggregate Quota is set at RMB 250 billion.
The Northbound Daily Quota is set at RMB 13 billion, and the Southbound Daily Quota is set at RMB 10.5 billion.

How does the Aggregate Quota work?

The Aggregate Quota caps the absolute amount of fund inflow into Mainland under Northbound and the absolute amount of fund outflow from the Mainland under Southbound.
At the end of each trading day, SEHK will calculate the remaining balance of the Northbound Aggregate Quota:
Aggregate Quota Balance = Aggregate Quota – Aggregate Buy Trades + Aggregate Sell Trades
If Aggregate Quota Balance is less than Daily Quota, Northbound buying will be suspended on the next trading day. However, investors can continue to sell SSE Securities. SEHK will re-open Northbound buying once the Aggregate Quota balance returns to the Daily Quota level or above.

How does the Daily Quota work?

The Daily Quota limits the maximum net buy value of cross-boundary trades under Shanghai-Hong Kong Stock Connect each day.
SEHK monitors the usage of the Northbound Daily Quota on a real time basis. The Northbound Daily Quota Balance will be updated on HKEx website every minute:
Daily Quota Balance = Daily Quota – Buy Orders + Sell Trades + Adjustments
If the Northbound Daily Quota Balance drops to zero during the opening call auction session, new buy orders will be rejected until Balance resume to a positive level.
If the Northbound Daily Quota Balance drops to zero during a continuous auction session, no further buy orders will be accepted for the remainder of the day.

Can investors participating in Shanghai-Hong Kong Stock Connect participate in the initial public offerings (IPO) in the other market?

It is currently contemplated that Shanghai-Hong Kong Stock Connect will not support initial public offering.

What’s the trading hours for trading SSE Securities?

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.

SSE Trading Session

SSE Trading Hours

Time for EPs to input Northbound orders

Opening Call Auction

09:15 – 09:25

09:10 – 11:30

Continuous Auction (Morning)

09:30 – 11:30

 

Continuous Auction (Afternoon)

13:00 – 15:00

12:55 – 15:00

09:20 – 09:25: SSE will not accept order cancellation

 

What is the trading and settlement currency?

Hong Kong and overseas investors will trade and settle SSE Securities in RMB only. Mainland investors will trade SEHK Securities quoted in HKD only and settle the trades with ChinaClear or its clearing participants in RMB.

Do I need to exchange RMB in order to trade SSE securities?

Investors need to have RMB balance in their accounts on Trade day. If there is insufficient, or no RMB in clients’ account, UOBKH will arrange FX on T+1 to convert the purchase of RMB from defaulted HKD.

What kind of order(s) can investors enter when trading SSE Securities under Shanghai-Hong Kong Stock Connect?

Only limit orders (SSE limit orders can be matched at the specified or better price) will be accepted for SSE Securities throughout the day. The orders cannot be amended. EPs who wish to amend their orders must cancel the original orders first and then input new orders.

Can investor do day trading on SSE Securities?

Day trading is not allowed for Mainland A shares market.

Is margin trading allowed for SSE Securities?

Subject to conditions, margin trading in SSE Securities may be conducted.
A List of Eligible SSE Securities for Margin Trading, the scope of which will be determined by SSE from time to time, will be posted on the HKEx website for reference by the investing public. Only those SSE Securities which are eligible for both buy orders and sell orders through the Shanghai-Hong Kong Stock Connect will be included in the List.
According to the relevant rules of SSE, SSE may suspend margin trading activities in specific A shares when the volume of margin trading activities in such A shares exceeds the threshold determined by SSE and resume margin trading activities when the volume drops below a prescribed threshold. When SEHK is notified by SSE that such suspension and resumption involves an SSE Security on the List of Eligible SSE Securities for Margin Trading, EPs and investors will be informed through the HKEx website. Margin trading in the relevant SSE Security should be suspended/resumed in Hong Kong accordingly.

Is Stock Borrowing and Lending (SBL) allowed for SSE Securities?

SBL of SSE Securities will be allowed in the following situations:
(a) for covered short selling: an investor borrows SSE Securities and sells it on SSE through a China Connect EP or a Trade-Through EP via Northbound trading; and
(b) for meeting the pre-trade checking requirement in certain circumstances. SBL in SSE Securities will be subject to restrictions set by SSE to be incorporated into the Rules of SEHK. These include:
(a) SBL agreements for covered short selling purpose cannot be longer than one month;
(b) SBL agreements for pre-trade checking purpose cannot be longer than one day (roll-over not allowed);
(c) Stock lending will be restricted to certain types of persons to be determined by SSE; and
(d) SBL activities will be required to be reported to SEHK SBL for the purpose of short selling will be limited to those SSE Securities which are eligible for both buy orders and sell orders while SBL for the purpose of meeting the pre-trade checking requirements will cover all SSE Securities.

Is short selling of SSE Securities allowed through Northbound trading?

Short selling of SSE Securities which are eligible for both buy orders and sell orders through Northbound trading will be allowed subject to a number of requirements set by SSE. These include requirements on:
(a) the eligibility of SSE Securities that can be short sold;
(b) flagging of short selling orders by EPs when inputting them into the system;
(c) the input price of a short selling order must not be lower than the last traded price (and in the absence of the last traded price, the previous closing price), of the relevant SSE Security;
(d) in respect of each SSE Security, restrictions will be imposed on the total quantity that can be short sold:
(i) on each trading day (i.e. 1% of HKSCC’s holding of that security in the omnibus account maintained in ChinaClear); and (ii) for a rolling period (i.e. 5% for 10 trading days);
(e) reporting of open short positions; and
(f) according to the relevant rules of SSE, SSE may suspend short selling activities in specific A shares when the volume of short selling activities in such A shares exceeds the threshold determined by SSE and resume short selling activities when the volume drops below a prescribed threshold. When SEHK is notified by SSE that such suspension and resumption involves an SSE Security on the Eligible SSE Securities List for Short Selling, EPs and investors will be informed through the HKEx website, and short selling in the relevant SSE Security will be suspended/resumed in Hong Kong accordingly.

Further details on the above will be published in due course. Implementation of some of the requirements described above needs system support. Therefore, covered short selling of SSE Securities will unlikely be available at the initial launch of Shanghai-Hong Kong Stock Connect. SEHK will keep the market informed of developments and the proposed timing of implementation.

Under what situation that investor will only be allowed to sell an SSE Security but restricted from further buying?

(a) the SSE Security subsequently ceases to be a constituent stock of the relevant indices; and/or
(b) the SSE Security is subsequently put under “risk alert”; and/or
(c) the corresponding H share of the SSE Security subsequently ceases to be traded on SEHK, as the case may be
(d) the security from entitlement is not an SSE Security but is an SSE-listed security and traded in RMB

What are the board lot/odd lot, order size and tick size for SSE Securities?

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. For example, if an investor has 107 shares of a certain SSE Security in his/her stock account, EPs can only input a sell order of 7 shares or 107 shares.
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.

Does SSE price limit apply under Shanghai-Hong Kong Stock Connect?

For SSE Securities, there is a general price limit of a ±10% (and a ±5% for stocks under special treatment (i.e. ST and *ST stocks) in the risk alert board) based on previous closing price. All orders input for SSE Securities must be within the price limit. Any orders with price beyond the price limit will be rejected by SSE. The upper and lower price limit will remain the same intra-day.

What is the holiday arrangement?

In the initial stage of operation of Shanghai-Hong Kong Stock Connect, investors will only be allowed to trade on the other market on days where both markets are open for trading, and banking services are available in both markets on the corresponding settlement days. This arrangement is essential in ensuring that investors and brokers will have the necessary banking support on the relevant settlement days when they will be required to make payments. The following table illustrates the holiday arrangement of Northbound trading of SSE Securities

 

Mainland

Hong Kong

Open for Northbound Trading?

Day-1

Business Day

Business Day

Yes

 

Day-2

Business Day

Business Day

No

HK market closes on money settlement day

Day-3

Business Day

Public Holiday

No

HK market closes on trading day

Day-4

Public Holiday

Business Day

No

Mainland market closes

 

What is the contingency arrangement under severe weather conditions?

In the initial stage, Northbound trading arrangement under severe weather conditions will be as follows:
If SSE is suspended due to bad weather, there will be no trading on the Northbound and Hong Kong investors and EPs will be informed by SEHK;
If typhoon signal number 8 (or above) and/or black rainstorm warning is issued in Hong Kong:

Scenarios Northbound Trading of SSE Securities Hong Kong Market today
T8 / Black rainstorm issued before HK market opens (i.e. 09:00 a.m.) Not Open
T8 issued between 09:00 a.m. and 09:15 a.m. Not Open Trading terminates after Pre-opening Session
T8 issued after SSE market opens (i.e. 09:15 a.m.) Trading will continue for 15 minutes. After 15 minutes, only order cancellation is allowed until SSE market is closed. Trading will be terminated in 15 minutes.
Black rainstorm issued after HK market opens (i.e. 09:00 a.m.) Trading continues as normal
T8 / Black rainstorm discontinued at or before 12:00 noon Trading resumes after 2 hours
T8 / Black rainstorm discontinued after 12:00 noon Not Open

 

Commission Fees

Negotiable. New/ Existing Clients please contact your Account Manager or call our Client Services Hotline on: +852 2136 1818.

Levies

How much does it cost to trade and settle SSE Securities under Shanghai-Hong Kong Stock Connect?

Hong Kong and overseas investors trading SSE Securities under Shanghai-Hong Kong Stock Connect will be subject to SSE’s Handling Fee and Securities Management Fee, together with ChinaClear’s “Transfer Fee”. Investors should note that certain existing CCASS fees still apply, including stock settlement fee for settlement instructions and money settlement fee. Subject to the SFC’s approval, HKSCC will also impose a “New CCASS Fee” on its CCASS Participants for providing depository and nominee services for their SSE Securities held in CCASS. Details of the new CCASS Fee will be announced later.

Besides, taxes imposed by the State Administration of Taxation (SAT), including stamp duty and dividend tax will also be applied to the Northbound trades and SSE Securities acquired through Shanghai-Hong Kong Stock Connect. Any additional tax imposed by the SAT, if applicable, will be subject to further clarification with the SAT.

Fees and taxes applicable to a Northbound trade:

Items Rate Charged by
Handling Fee 0.00487% (effective 1 Aug 2015) of the consideration of a transaction per side SSE
Securities Management Fee 0.00200% of the consideration of a transaction per side CSRC
Transfer Fee 0.004% (effective 15 Aug 2016) of the consideration of a transaction per side ChinaClear
Stamp Duty 0.10000% of the consideration of a transaction on the seller SAT

 

All the above fees and levies will be collected from CCASS Participants’ designated bank accounts at day-end of T day. Fees and taxes to be confirmed with the relevant regulators/authorities:

Items Description Charged by
New CCASS Fee A new fee for providing depository and nominee services to CPs for SSE Securities HKSCC
Dividend Tax Applicable to cash dividend and bonus issue SAT
Capital Gain Tax Applicable to share disposal SAT

 

Dividend tax will be withheld by issuer and ChinaClear upon dividend payment. The New CCASS Fee, if implemented, will be collected in HKD on a monthly basis.

 

Settlement Cycle
Stock: Trade Day
Cash: T+1

Trading Reminder:

• Clients ensure RMB balance in their accounts on T
• If there is insufficient RMB in clients’ a/c on T+1, where the purchased shares are approved shares for margin financing, OD interest will be charged.
• For those non-eligible SSE Securities for Margin Trading, trades can only be settled by means of pure cash on settlement date, no OD allowed.
• Sale proceeds will be credited to clients’ account on T+1

UOB Kay Hian provides you a list of SSE A shares margin trading service. In addition to the comprehensive margin financing services for Hong Kong & U.S. market, a wide range of marginable SSE A shares through SH-HK Stock Connect are also added on the list for your choice, enabling you to grasp every investment opportunity with flexibility and generate higher potential returns with less capital.
Special Features:

•        Offer extra capital up to 80% of the prevailing marketing value of the stocks holding. Click here for the SSE A shares margin ratio now

•        The online subscription process is quick and easy. Clients may simply open a Hong Kong stock margin account to enjoy SSE A shares margin trading services

New clients/ existing clients without a margin account: Please click here to open a “Margin Securities Account” online. Filling in the form just takes 3 steps in 6 minutes. You may also choose to fill in and submit the physical Cash/Margin Account application form. Click here to download the form and learn more.

Need Help?
  • Hotline:
  • +852 2136 1818
  • Night Futures/
    US Trading 24-hour Service Hotline:
  • +852 2826 4888
  • Email :
  • clientservices@uobkayhian.com.hk
  • Operating hours:
  • 9:00am-6:00pm Mon-Fri,closed on
  • Sat,Sun,and HK Public Holidays