Frequently asked questionsI. Related to Northbound Trades Quota
- 1. How does Northbound Daily Quota work?
SEHK monitors the usage of the Northbound Daily Quota on a real time basis. The calculation is as follow:
The Daily Quota will be reset every day. Unused Daily Quota will NOT be carried over to the following day’s Daily Quota.
When the Northbound Daily Quota Balance drops to zero or is exceeded during a continuous auction session (or closing call 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.
When 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, SEHK will again accept Northbound buy orders once the Northbound Daily Quota Balance resumes to a positive level before the end of the session.
It should be noted that buy orders already accepted will not be affected by the Daily Quota being used up and will remain on the order book of SSE/SZSE unless otherwise cancelled by the relevant brokers.
^Daily Quota Balance will be increased when a) a buy order is cancelled; b) a buy order is rejected by the other exchange; or c) a buy order is executed at a better price.
II. Related to Northbound Trading Link Arrangement
- 1. Can investor do day trading on eligible SSE/SZSE securities ?
Day trading is not allowed for Mainland market. Therefore, Hong Kong and overseas investors buying eligible SSE/SZSE securities on Trade Day can only sell the shares on or after Trade Day + 1 Day.
- 2. What does investor need to be aware of before placing any SSE/SZSE securities sell order?
Investors must ensure they have sufficient shares in their accounts opened with the selling broker when placing sell orders. If the shares are kept in an account opened with another SEHK Exchange Participants or a custodian, investors must first transfer the shares to the selling broker before the market opens on the day of selling (Trade Day) in order to sell their shares on Trade Day.
- 3. In case an SSE/SZSE security is subsequently removed from the Stock Connect program, can investors sell the security?
In such a case, investors are only allowed to place sell order for the delisted SSE/SZSE securities, and are prohibited from further buying such SSE/SZSE securities. Unless such A Share is subsequently removed from the “risk alert board”, and it is accepted as an SSE/SZSE security if it remains as a constituent stock of the relevant indices or if its corresponding H share continues to be listed and traded on the SEHK (as appropriate).
Under the following cases, investors will only be allowed to sell A Share but restricted from further buying if:
- the A Share subsequently ceases to be a constituent stock of the relevant indices; and/or
- the A Share is subsequently under "risk alert"; and/or
- the corresponding H share of the SSE/SZSE security subsequently ceases to be traded on SEHK; and/or
- the SZSE A Shares, based on any subsequent periodic review, have a market capitalisation of less than RMB6 billion.
- 4. Can investor trade odd lot for SSE/SZSE securities via Stock Connect?
Currently, odd lot trading is only available for sell orders under Northbound Trading Link. Investor should note that all board lot and odd lot orders are both matched on the same platform on SSE/SZSE , and subject to the same share price. Hence, any Northbound buy trade executed may be matched with odd lot sell orders, resulting in odd lot trades.
- 5. What is the holiday arrangement?
Under Northbound Trading Link, investors are only allowed to trade on days where both markets are open for trading, and banking services are available in both markets on the corresponding settlement days. Examples:
Mainland Hong Kong Northbound trading opens or not? Day-1 Business Day Business Day Yes Day-2 Business Day Business Day No – HK market closes on money settlement day (Day-3) Day-3 Business Day Public Holiday No – HK market closes on trading day Day-4 Public Holiday Business Day No – Mainland market closes
- 6. Will there be any lower price limit for Northbound Trading Link?
A shares traded on the SSE/SZSE are subject to a price limit based on their previous closing price, including a ±10% price limit for stocks under normal circumstances and a ±5% price limit for stocks that are under special treatment (i.e. ST and *ST stocks) under risk alert. Northbound trading follows the same rule.
In addition, SEHK sets a lower price limit of 3% on buy orders of all Northbound Trades. Buy order for a Northbound Trades at a price below its current best bid price (and if no current best bid price is available, the latest trade price, and if that is not available, the previous closing price) by a certain percentage will be rejected by the China Stock Connect system. Such price limit does not apply during the Opening Call Auction session of SSE/SZSE.
- 7. What is the contingency arrangement for Northbound trading under severe weather conditions?
- Trading arrangement under severe weather conditions on the Mainland
- If SSE/SZSE is suspended due to bad weather, there will be no trading on the Northbound and Hong Kong investors and Securities Brokers will be informed by SEHK.
- Trading arrangement under severe weather conditions in Hong Kong
Scenarios Northbound Trading Link Arrangement SEHK Arrangement T8/Black rainstorm issued before HK market opens
(i.e. before 9:00 a.m.) and discontinued after 12:00 noon
Not open Not open T8 issued between 9:00 a.m. and 9:15 a.m. Not open Trading terminates after Pre-opening Session T8 issued after SSE/SZSE market opens
(i.e. 9:15 a.m.)
Arrangement to be announced in due course Trading terminates in 15 minutes Black rainstorm issued after HK market opens
(i.e. 9:00 a.m.)
Trading continues as normal Trading continues as normal T8/Black rainstorm discontinued at or before 12:00 noon Trading resumes after 2 hours Trading resumes after 2 hours T8/Black rainstorm discontinued after 12:00 noon Not open Not open
- Trading arrangement under severe weather conditions on the Mainland
- 8. What type of investors is eligible to trade in ChiNext Board of SZSE?
At the initial stage of Shenzhen Connect, investors eligible to trade shares that are listed on the ChiNext Board of SZSE under Northbound trading will be limited to institutional professional investors. Institutional Professional Investor, as defined under paragraph 15.2 of the Code of Conduct for Persons Licensed by or registered with the SFC, means a person falling under paragraphs (a) to (i) of the definition of “professional investors” in section 1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance.
III. Related to Clearing and Settlement Arrangement
- 1. According to Northbound Trading Link Arrangement, how would SSE/SZSE securities be custodised for investors?
All customers’ holdings of A Shares purchased via Northbound Trading Link will be kept at the Central Clearing and Settlement System (“CCASS”). Since SSE/SZSE securities are issued in scripless form, therefore, physical deposits and withdrawals of such securities through Standard Chartered Bank into/from the CCASS Depository will not be available. Investors can only hold eligible SSE/SZSE securities through their brokers/custodians. Their ownership of such is reflected in their brokers/custodians’ own records such as client statements.
Please also be noted that Standard Chartered Bank will not provide custodial service for eligible SSE/SZSE securities which are transferred-in from securities brokerage firms in Mainland China.
IV. Related to Investors’ Protection and Disclosure Obligations
- 1. Are investors protected by the Investor Compensation Fund?
Investors should note that the current Investor Compensation Fund will not cover any Northbound and Southbound Trading activities under Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect (“ China Connect”).
- 2. For investors, are there any disclosure obligations for trading SSE/SZSE securities?
Under the current PRC rules, when an investor holds or controls up to 5% of the issued shares of an SSE/ SZSE -listed issuer, the investor is required to disclose his/her interest within three working days. Such an investor may not buy or sell the shares in the listed issuer within the three-day period.
Besides, for such an investor, every time when there is an increase or decrease in his/her shareholding by 5%, he/she is required to make a disclosure within three working days.
Note: The 5% change means the actual magnitude of the net change of its shareholding as a percentage of the total issued share capital of the company (e.g. an increase from 10% to 15% or decrease from 10% to 5%).