Exchanges say they’re ready for Stock Connect program but await word from Chinese regulators
A planned link-up between the stock exchanges of Shanghai and Hong Kong has been delayed because the exchanges have not received regulatory approval for the connection, according to exchange operator Hong Kong Exchanges and Clearing (HKEx).
A connection between the two, labeled Stock Connect, was expected to take place in late October after the exchanges announced the program and launched a pilot scheme in April that allowed Hong Kong and Shanghai investors to trade limited amounts of stocks on each other’s exchanges.
The Stock Connect program is believed to pave the way for the entry of mainland Chinese stocks to global stock indexes and allow free access to the country’s $4 tn stock market.
The link-up is expected to grant foreign investors access to mainland Chinese stocks and integrate the exchange with the global financial system. But HKEx says it has no firm timetable to carry out the plan even if it’s technically ready to do so.
‘To date, the parties are technically ready to implement Stock Connect,’ the exchange operator says in a notice on its website. ‘At the date of this announcement, however, HKEx has not received the relevant approval for the launch of Stock Connect, and there is no firm date for its implementation. Further announcements will be made as and when there are any material developments on the timetable of the launch.’
Earlier this month, the China Securities Regulatory Commission and Hong Kong’s Securities and Futures Commission signed a memorandum of understanding to tighten regulation of Stock Connect, further increasing expectations the program would take effect soon.
The announcement sent HKEx shares down as much as 5 percent, along with shares of Chinese brokerage firms Haitong Securities, CITIC Securities and others. The Hang Seng Index declined 1 percent on the announcement.
