It is the establishment of mutual market access between the Mainland and Hong Kong, with Shanghai and Shenzhen Connect for the stock market.

Shanghai Connect is a securities trading and clearing links programme 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 Connect, The Stock Exchange of Hong Kong Limited (SEHK), a wholly-owned subsidiary of HKEX, and SSE have established 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.

Hong Kong Securities Clearing Company Limited (HKSCC), also a wholly-owned subsidiary of HKEX, and ChinaClear are responsible for the clearing, settlement and the provision of depository, nominee and other related services of the trades executed by their respective market participants and/or investors.

Following the successful launch of Shanghai Connect, Shenzhen Connect is considered as its natural extension. Shenzhen Connect will apply similar programme principles and design.

China Connect only encompasses secondary market trading. Primary market activities, such as initial public offering are not supported.

Investors are only allowed to trade on the other market on days when both markets are open for trading, and banking services are available in both markets on the corresponding settlement days. If a Northbound trading day (for China Connect) is a half trading day in Hong Kong, Northbound Trading continues until the SSE market or SZSE is closed. The Northbound trading calendar is available on the HKEx website.

Hong Kong and overseas investors are required to follow SSE’s and SZSE’s trading hours to trade SSE and SZSE Securities (i.e. Northbound trading). However, SEHK accepts Northbound orders from EPs five minutes before the Mainland market session opens in the morning and in the afternoon.

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

14:57 – 15:00: SZSE will not accept order cancellation

Opening Call Auction session: Orders and order cancellations can be accepted by SEHK but will not be processed by SSE and SZSE until respective market open

Orders that are not executed during the opening call auction session will automatically enter the continuous auction session

Southbound trading will follow SEHK’s trading hours.

Day trading is not allowed on the Mainland A shares market. Hong Kong and overseas investors buying SSE and SZSE Securities on T-day can only sell the shares on or after T+1 day.

Both cash and securities settlement are on T day for Shanghai and Shenzhen Securities Services via the China Connect.

An input control mechanism is in place, to ensure that (a) the order price cannot exceed 10% of the previous closing price (5% for stocks on the risk alert board) for both buy and sell orders; and (b) buy orders with input prices lower than the current best bid (or last traded price in the absence of a current best bid, or previous closing price in the absence of both a current best bid and last traded price) beyond 3% will be rejected.

Investors are only be allowed to sell existing holdings of that SSE and SZSE Security and are restricted from further buying.

Trading under China Connect will be subject to a Daily Quota. Northbound trading and Southbound trading are respectively subject to a separate set of Daily Quota, which will be monitored by SEHK and SSE/SZSE respectively. The Northbound Daily Quota is set at RMB 52 billion for each of China Connect - Shanghai Market / Shenzhen Market.

The Daily Quota limits the maximum net buy value of cross-boundary trades under China Connect each day.

SEHK will monitor the usage of the Northbound Daily Quota on a real-time basis, and the Northbound Daily Quota Balance is and will be updated on HKEX’s website every minute and disseminiated through CCOG and OMD Index Feed at 5-second intervals:

Daily Quota Balance = Daily Quota – Buy Orders + Sell Trades + Adjustments

The Daily Quota will be reset every day. Unused Daily Quota will NOT be carried over to the following day’s Daily Quota.

If the Northbound Daily Quota Balance drops to zero or the Daily Quota is exceeded during the opening call auction session, new buy orders will be rejected. However, as order cancellation is common during opening call auction, the Northbound Daily Quota Balance may resume to a positive level before the end of the opening call auction. When that happens, SEHK will again accept Northbound buy orders.

Once the Northbound Daily Quota Balance drops to zero or the Daily Quota is exceeded during a continuous auction session (or closing call auction session for SZSE), no further buy orders will be accepted for the remainder of the day. SEHK will resume the Northbound buying service on the following trading day.

China Connect orders cannot be amended. Investors who wish to amend their orders must cancel the original orders first and then input new orders.

All SSE and SZSE Securities are subject to the same trading board lot size, which is 100 shares (buy orders must be in a 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 SZSE, 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.

Per A-share odd lot trading requirements published by SSE and SZSE, China Connect buy orders involving odd lots are not allowed. A sale of odd lots is allowed provided that the China Connect sell order relates to the sale of all, and not part, of the odd lots held in respect of a China Connect Security for a client. For example, if a client has 107 shares of a certain SSE/SZSE Security in his/her stock account, he/she is only allowed to place a sell order instruction of 7 shares or 107 shares.

Since SSE and SZSE Securities are issued in scripless form, physical deposits and withdrawals of SSE and SZSE Securities into/from the CCASS Depository are not available.

As explained above, Hong Kong and overseas investors can only hold SSE and SZSE Securities through their brokers/custodians. Their ownership of such is reflected in their brokers/custodians’ own records such as client statements.

Under China Connect, Hong Kong and overseas investors will be subject to the following fees and levies imposed by the SSE, SZSE, ChinaClear, HKSCC or the relevant Mainland authority when they trade and settle SSE Securities and SZSE Securities:

The following is an example illustrating the calculation of the revised fees for Northbound Trading and Clearing:

Assume that on T day, a Clearing Participant has to clear Northbound Sell Trades with details as follows:

Trade Quantity: 300 shares　　　Trade Price: ¥ 10 per share

Dividend tax is withheld upon dividend payment.

For Shanghai Connect, investors may source real time SSE market data via SSE licensed information vendors, a list of which is available on the website of China Investment Information Services Limited, which is a subsidiary of SSE incorporated in Hong Kong and is responsible for SSE overseas market data business. The list of such vendors and their websites is available on the HKEx website.

For SZSE market data, investors may source real time SZSE market data via SSE licensed information vendors and a list of licensed information vendors is available on the website of Shenzhen Securities Information Co. Ltd., an exclusive agent of SZSE for local and overseas market data businesses.

Hong Kong and overseas investors should follow the Mainland market practice and refer to the websites of SSE and SZSE and officially appointed newspapers and website (i.e. Shanghai Securities News (上海證券報), Securities Times (證券時報), China Securities Journal (中國證券報), Securities Daily (證券日報) and www.cninfo.com.cn (巨潮資訊網) for the corporate announcements made by SSE/SZSE-listed companies.

Effective 1 Jan 2020, the Investor Compensation Fund established under the SFO has been expanded to cover Northbound trading through the China Connect Service. Moreover, investor protection measures which are required under the SFO to be observed by Exchange Participants vis-à-vis their clients, such as those relating to dealings with client securities and payment of client money into segregated accounts, are also applicable to Northbound trading activities undertaken by Exchange Participants for their clients under China Connect.

Investors will only be allowed to sell but will be restricted from buying such SSE Securities if:
(a) such securities subsequently cease to be a constituent stock of the relevant indices; and/or
(b) they are subsequently placed under risk alert; and/or
(c) the corresponding H shares of such securities are subsequently delisted from SEHK, as the case may be.

Investors will only be allowed to sell but will be restricted from buying such SZSE Securities if:
(a) such securities subsequently cease to be a constituent stock of the relevant indices; and/or
(b) such securities, based on any subsequent periodic review, have a market capitalisation of less than RMB 6 billion; and/or
(c) they are subsequently placed under risk alert; and/or
(d) the corresponding H shares of such securities are subsequently delisted from SEHK, as the case may be.

The Northbound Investor ID model was launched on 26 September 2018.

Clients should provide the consent to Citibank to disclose and submit Broker-to-Client Assigned Number (BCAN) and Client-Identity-Data (CID) to SEHK and transmit to Shanghai/Shenzhen Stock Exchange for validation.

Yes, clients are required to provide consent.

Once client submits the consent, it takes at least T+2 northbound trading days to complete the BCAN registration. If your Chinese name (if any) is in Simplified Chinese characters in your identification document, we would require at least an additional 3 northbound trading days to process your consent.

Below client identification data will be required:

• - Full name (in English and Chinese)
• - ID issuing country/region
• - ID Type
• - ID Number

If consent is not provided by the client, all buy orders for China Connect stocks are not allowed. Only sell orders are allowed.

Pursuant to the circular from the Stock Exchange of Hong Kong (SEHK) on 24 June 2022, Mainland investors can no longer proactively buy China Connect Securities (including subscription for right issues), but excluding obtaining the China Connect Securities as a result of corporation actions (such as distribution of stock dividends) through Northbound Trading under China Connect after 24 July 2023. However, selling of existing China Connect Securities holding beyond the above implementation date will not be impacted.

Definition of Mainland investors: (a) individuals that possess Mainland ID documents; (b) holders of a joint account if one of the holders is considered as Mainland investor under (a); and (c) corporate or unincorporated entities which are registered in the Mainland. For details, please refer to the circular from the Exchange.