Sub-custody guide: Hong Kong
Shanghai-Hong Kong Stock Connect was announced in April 2014 and went live in November. One of the main benefits of this mutual market access programme is that offshore investors are able to gain access to the China A-share market through their Hong Kong broker relationships, where they previously may not have been able to do so.
There were a number of challenges that needed to be
addressed for market participants to prepare for such a significant market
change, which essentially saw two exchanges with different trading rules and
technologies coming together, says Stephen Pemberton, managing director, head
custody clearing & collateral services transaction banking at Standard
Chartered.
“As expected, some market participants are taking a
wait-and-see approach. Nevertheless, this is a huge milestone, not just in
Asia, but also for global financial markets as it is the first exchange link up
of its kind.”
Operationally, cross-boundary trades follow the settlement
cycle of the respective market – for example, in Hong Kong A-share trades
settle on transaction day and money settlement takes place on T+1, adds Soh Ee
Fong, head securities & fiduciary services global transaction services DBS
Bank.
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