On the evening of April 19, the China Securities Regulatory Commission (CSRC) and the Shanghai and Shenzhen Stock Exchanges issued a series of policies on capital market cooperation with Hong Kong, fund transaction fees, and new regulations for Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect.
1. The China Securities Regulatory Commission (CSRC) issued five measures for capital market cooperation with Hong Kong
In the near future, on the basis of extensive and in-depth research and listening to opinions, we will deepen cooperation with Hong Kong and take the following five measures to further expand and optimize the Stock Connect mechanism, help Hong Kong consolidate and enhance its status as an international financial center, and jointly promote the coordinated development of the capital markets of the two places.
The first is to relax the scope of eligible products of equity ETFs under Stock Connect. Under the guidance of the SFCs of the two places, the Shanghai and Shenzhen Stock Exchanges have reached a consensus to appropriately relax the average AUM requirements for eligible equity ETFs, reduce the Hong Kong equity weighting requirements and Hong Kong Stock Connect stock weighting requirements for Southbound Hong Kong Stock Connect ETF products, and make reciprocal adjustments to Northbound Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect ETF products, so as to support the development of Hong Kong as an international asset management center.
The second is to include REITs in the Stock Connect. It is proposed to make overall reference to the mutual access system arrangements between the two places, and include eligible REITs in the Mainland and Hong Kong into the Stock Connect, so as to further enrich the trading varieties of Stock Connect.
The third is to support the inclusion of RMB stock trading counters in the Hong Kong Stock Connect. Since the launch of the HKD-RMB Dual Counter Mechanism in Hong Kong, the Mainland, HKEX and HKSCC have been actively studying the inclusion of the RMB counter in Hong Kong Stock Connect, and a preliminary consensus has been reached on the relevant business plan. In the next step, the two sides will continue to promote the improvement of business plans, rule revisions, technological transformation, investor education and other preparatory work, and strive for an early launch to facilitate the internationalization of the RMB.
Fourth, optimize the mutual recognition of funds arrangement. It is proposed to promote the appropriate relaxation of the restrictions on the proportion of mutual recognition of funds sold to foreign countries, and allow the investment management functions of Hong Kong recognised funds to be delegated to overseas asset management institutions with the same group as the managers, so as to further optimize the mutual recognition of funds arrangement and better meet the diversified investment needs of investors in the two places.
Fifth, we will support leading enterprises in mainland industries to list in Hong Kong. In the year since the promulgation and implementation of the rules of the overseas listing filing management system, 72 enterprises have completed the filing of initial public offerings (IPOs) in Hong Kong, and the financing channels for listing in Hong Kong have been unimpeded, which strongly supports the standardized development of mainland enterprises by making use of the two markets and two resources. The China Securities Regulatory Commission (CSRC) will further strengthen communication and coordination with relevant departments to support eligible leading enterprises in the Mainland industry to list and raise funds in Hong Kong.
2. The China Securities Regulatory Commission formulated and promulgated the Regulations on the Administration of Securities Transaction Costs of Publicly Offered Securities Investment Funds
There are 19 articles in the "Provisions", the main content of which is four aspects:
The first is to reduce the commission rate of fund stock trading;
the second is to reduce the upper limit of the distribution ratio of fund managers' securities trading commissions;
Third, comprehensively strengthen the relevant compliance and internal control requirements of fund managers and securities companies;
Fourth, clarify the content and requirements for the disclosure of transaction commission information at the fund manager level.
The promulgation and implementation of the "Provisions" will further optimize the commission system for fund securities transactions, reduce the transaction costs of fund investors, and help guide securities and fund operating institutions to further correct their business philosophy, focus on improving investors' long-term returns, provide better trading, research and investment services, and promote the formation of a good industry development ecology. In the next step, the China Securities Regulatory Commission will guide the CSRC and industry associations to do a good job in the interpretation, training and implementation of the new regulations, and organize industry institutions to complete the adjustment of the commission rate for the first stock transaction by July 1, 2024.
3. The China Securities Regulatory Commission issued the "Sixteen Measures for the High-level Development of Capital Market Services for Technology Enterprises"
In order to implement the "Several Opinions of the State Council on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market", better serve scientific and technological innovation, and promote the development of new productive forces, the China Securities Regulatory Commission has formulated the "Sixteen Measures for the High-level Development of Capital Market Services for Science and Technology Enterprises", which proposes all-round supportive measures from listing financing, mergers and acquisitions, bond issuance, private equity investment, etc., the main contents include:
The first is to establish a "green channel" for financing. Strengthen policy coordination with relevant departments, accurately identify technology-based enterprises, improve the "green channel" mechanism, and give priority to supporting technology-based enterprises that break through key core technologies to raise funds in the capital market.
The second is to support the equity financing of science and technology enterprises. Coordinate the functions of various sectors, support the initial listing, refinancing, mergers and acquisitions and overseas listing of technology-based enterprises, and guide private equity venture capital funds to invest in the field of scientific and technological innovation. Improve the methods, objects and implementation procedures of equity incentives for science and technology enterprises.
The third is to strengthen the precise support of the bond market. Promote the high-quality development of scientific and technological innovation corporate bonds, focus on supporting bond financing for enterprises in high-tech and strategic emerging industries, and encourage policy institutions and market institutions to provide credit enhancement support for private science and technology enterprises to issue scientific and technological innovation bonds for financing.
Fourth, improve the supporting system to support scientific and technological innovation. Intensify the innovation of financial products, and urge securities companies to improve their ability to innovate in service technology. Practice the concept of "open the door to audit" and optimize the service mechanism of science and technology enterprises.
In the next step, the China Securities Regulatory Commission will follow the general tone of seeking progress while maintaining stability, strengthen the organization and implementation and overall coordination, supervise the implementation of various system work measures, implement dynamic monitoring, carry out regular assessments, and optimize relevant measures and arrangements in a timely manner.
4. The China Securities Regulatory Commission (CSRC) approved the official launch of the "Fund E Account" APP
Recently, the China Securities Regulatory Commission (CSRC) approved ChinaClear to launch a unified inquiry platform for public fund account shares and the "Fund E Account" APP to be officially launched, and investors can directly download and use the "Fund E Account" APP through major mobile phone app stores.
"Fund E Account" aims to provide individual investors with a "one-stop" query service for public fund account and share information, which is an important infrastructure and key livelihood project in the public fund industry.
The China Securities Regulatory Commission (CSRC) will urge ChinaClear to continue to do a good job in the construction and operation of the "Fund E Account" APP, continuously optimize and improve the system functions, continue to expand service scenarios, and strive to improve service quality, so as to effectively provide more high-quality, efficient and convenient services for the majority of public fund investors.
5. The Shanghai Stock Exchange solicited opinions on the Implementation Measures for Shanghai-Hong Kong Stock Connect Business of the Shanghai Stock Exchange (Consultation Paper).
On April 19, the Shanghai Stock Exchange solicited public opinions on the "Implementation Measures for Shanghai-Hong Kong Stock Connect Business of the Shanghai Stock Exchange (Consultation Draft)", clarifying the requirements for the transfer of Shanghai-Hong Kong Stock Connect ETFs and Hong Kong Stock Connect ETFs in terms of scale and weighting. The "Implementation Measures" proposes to revise 6 articles, mainly to modify the scope of Shanghai-Hong Kong Stock Connect and Hong Kong Stock Connect ETFs.
Clarify the requirements for the transfer of SSE ETFs and Hong Kong Stock Connect ETFs in terms of size and weighting. In terms of SSE Stock Connect, the threshold for ETF inclusion has been adjusted from no less than RMB1.5 billion to no less than RMB500 million, and the proportion of ETFs has been adjusted to "the weighting of SSE and SZSE listed stocks shall not be less than 60% of the underlying index constituent securities tracked, and the weighting of SSE and SZSE securities shall not be less than 60%".
In terms of Southbound trading, the threshold for ETF inclusion has been adjusted from no less than HK$1.7 billion to no less than HK$550 million, and the proportion of ETFs will be adjusted to "the weighting of stocks listed on the Stock Exchange shall not be less than 60% and the weighting of Southbound securities shall not be less than 60% among the underlying index constituent securities tracked", and the index will no longer be distinguished.
Clarify the transfer of the relevant scale and weight proportion of SSE ETFs and Hong Kong Stock Connect ETFs. For SSE Stock Connect, the size of ETF transfers will be adjusted from less than RMB1 billion to less than RMB400 million, and the ratio of ETFs will be adjusted to "less than 55% of the underlying index constituent securities tracked, or less than 55% of the SSE and SZSE securities".
In terms of Southbound trading, the scale of the transfer-out will be adjusted from less than HK$1.2 billion to less than HK$450 million, and the call-out ratio will be uniformly adjusted to "the weighting of stocks listed on the Stock Exchange is less than 55% of the underlying index constituent securities tracked, or the weighting of Southbound securities is less than 55%", and the index will no longer be distinguished.
6. The Shenzhen Stock Exchange solicited public opinions on the revision of the Implementation Measures for Shenzhen-Hong Kong Stock Connect Business of the Shenzhen Stock Exchange
On April 19, the Shenzhen Stock Exchange solicited public opinions on the revision of the "Implementation Measures for Shenzhen-Hong Kong Stock Connect Business of the Shenzhen Stock Exchange", clarifying the transfer of the relevant scale and weight proportion of Shenzhen-Hong Kong Stock Connect ETFs and Hong Kong Stock Connect ETFs. The proposed revision of Article 6 of the "Implementation Measures" is mainly to modify the scope of Shenzhen-Hong Kong Stock Connect and Hong Kong Stock Connect ETFs.
Clarify the requirements for the transfer of SZSE ETFs and Hong Kong Stock Connect ETFs in terms of size and weighting. In terms of Shenzhen-Hong Kong Stock Connect, the threshold for ETF inclusion has been adjusted from no less than RMB1.5 billion to no less than RMB500 million, and the transfer ratio has been adjusted to "the weighting of stocks listed on the Shenzhen Stock Exchange and the Shanghai Stock Exchange shall not be less than 60% of the underlying index constituent securities tracked, and the weighting of Shenzhen-Hong Kong Securities and Shanghai-Hong Kong Stock Connect Securities shall not be less than 60%".
In terms of Southbound trading, the threshold for ETF inclusion has been adjusted from no less than HK$1.7 billion to no less than HK$550 million, and the proportion of ETFs will be adjusted to "the weighting of stocks listed on the Stock Exchange shall not be less than 60% and the weighting of Southbound securities shall not be less than 60% among the underlying index constituent securities tracked", and the index will no longer be distinguished.
Clarify the transfer of the relevant size and weight proportion of SZSE ETFs and Hong Kong Stock Connect ETFs. In terms of Shenzhen-Hong Kong Stock Connect, the scale of ETF transfers will be adjusted from less than RMB1 billion to less than RMB400 million, and the ratio of ETFs will be adjusted to "the weighting of stocks listed on the Shenzhen Stock Exchange and the Shanghai Stock Exchange shall be less than 55%, or the weighting of SZSE securities and Shanghai-Hong Kong Stock Connect shall be less than 55%".
In terms of Southbound trading, the scale of the transfer-out will be adjusted from less than HK$1.2 billion to less than HK$450 million, and the call-out ratio will be uniformly adjusted to "the weighting of stocks listed on the Stock Exchange shall be less than 55% of the underlying index constituent securities tracked, or the weighting of Southbound securities shall be less than 55%", and the index will no longer be distinguished.
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