【Financial Str. Release】China allows eligible ETFs to be traded under Stock Connect scheme

File photo shows the exterior view of Shanghai Stock Exchange at Pudong New Area in Shanghai, east China. (Xinhua)

BEIJING, June 1 (Xinhua) -- Bourses in the Chinese mainland and China's Hong Kong Special Administrative Region (HKSAR) have been nodded in principle to put eligible exchange-traded funds (ETFs) into the investable targets basket of the Shanghai- and Shenzhen-Hong Kong Stock Connect programs, reported Xinhua Finance on May 27.

The report citing a joint announcement released by China Securities Regulatory Commission (CSRC) and the local securities regulator in Hong Kong, the Securities and Futures Commission (SFC) said that they took the move to further enrich the investable products under the Stock Connect programs and provide more conveniences and opportunities for domestic and overseas investors.

After the inclusion, investors in the Chinese mainland and HKSAR are permitted to trade via securities firms or brokers shares of the eligible ETFs listed on the stock exchange of Hong Kong or Shanghai and Shenzhen stock exchanges in secondary market trading and no subscription and redemption are allowed.

Rules on detailed requirements for qualified ETFs will be publicized by the stock exchanges in Shanghai, Shenzhen and Hong Kong. The bourses will select suitable ETFs pursuant to their sizes and stock constituents of the indexes they track by prioritizing those whose underlying stocks are mainly composed of the investable stocks under the Stock Connect programs. Upon approval, the exchanges are allowed to adjust the eligible ETFs.

The ETF investment quotas will be aggregated together with the stock investment quotas under the Stock Connect for calculation and administrative purposes.

Formal implementation of the inclusion will be announced in near future as preparations for the inclusion are expected to take around two months given the necessary rules adjustment, technical system development and testing, and investor education as well. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)