Institutional two-way opening of the capital market has taken a new milestone.
Recently, the China Securities Regulatory Commission publicly solicited opinions on the provisions on the supervision of interconnected depositary receipts business of domestic and foreign stock exchanges (hereinafter referred to as the “regulatory provisions”), marking that the interconnected depositary receipts business of domestic and foreign stock markets starting from Shanghai Luntong is about to enter a new stage of development. In order to make steady preparations for various businesses and ensure the smooth launch of businesses, the Shanghai and Shenzhen Stock Exchange has formulated supporting business rules in accordance with the regulatory provisions and solicited opinions from the public since December 24.
The supporting business rules publicly solicited by the Shanghai and Shenzhen stock exchange include “one method” and “three guidelines”, That is, the Interim Measures for the listing and trading of Depositary Receipts (Draft for comments) of Shanghai and Shenzhen Stock Exchange, the guidelines for the pre audit business of the listing of Chinese Depositary Receipts (Draft for comments), the guidelines for the cross-border conversion business of Chinese Depositary Receipts (Draft for comments), and the guidelines for the market making business of Chinese Depositary Receipts (Draft for comments). The supporting business rules make corresponding adjustments to the listing conditions of Chinese depositary receipts, pre-approval arrangements for listing after opening the financing function, trading and cross-border conversion mechanism, continuous supervision requirements, investor suitability requirements, and individual terms of global depositary receipts. The deadline for public comment and feedback is January 16, 2022.
On the whole, the supporting rules of interconnected depositary receipts have been adjusted accordingly on the basis of the relevant rules of the original Shanghai Luntong:
I. listing conditions: the issuance threshold shall not be less than 20 billion yuan
In view of the revised regulations on the supervision of interconnected depositary receipts business of domestic and foreign stock exchanges (hereinafter referred to as the regulations) by the CSRC, the scope of application of interconnected depositary receipts business is extended from the main board market of the London Stock Exchange to the overseas market including the London Stock Exchange, The issuer of overseas basic securities of China depositary receipts has expanded from a company listed on the London Stock Exchange to a company listed on an overseas stock exchange within the scope recognized by the CSRC. The revised Interim Measures of the Shanghai Stock Exchange have correspondingly revised the listing conditions for overseas basic securities issuers to issue and list China depositary receipts, That is, the requirements for the length of overseas listing shall be adjusted accordingly to “listing on the overseas stock exchange for at least 3 years and other conditions for the length of listing agreed by the CSRC and the overseas securities regulatory authority according to the market stratification of the place where the overseas basic securities are listed”. The market value requirements, the lower limit of listing shares and the lower limit of listing market value of overseas issuers of Chinese depositary receipts remain unchanged.
The Interim Measures of Shenzhen Stock Exchange defines the listing conditions, including public offering conditions, market value standard (the market value threshold for retaining the Shanghai Luntong market value is required to be no less than 20 billion yuan), listing life (overseas listing for more than 3 years), and initial scale (50 million copies and market value of more than 500 million yuan).
II. Listing mechanism: shorten the listing cycle
In terms of listing mechanism, optimize the registration and listing process of new shares after the issuance of Chinese depositary receipts, and shorten the listing cycle of Chinese depositary receipts.
In terms of trading mechanism, the previous closing price displayed by the real-time market on the first day of listing of China depositary receipts based on new shares is its issuance price, and the provisions of the trading mechanism on the first day of listing of main board shares are used (applicable) on the first day of listing.
In terms of cross-border conversion mechanism, there is no restricted redemption period for Chinese depositary receipts, and the cross-border conversion between Chinese depositary receipts and overseas underlying securities can be carried out from the date of listing of Chinese depositary receipts.
III. information disclosure: foreign issuers are allowed to prepare periodic reports in foreign currencies
The Interim Measures specify the requirements for continuous information disclosure after the listing of Chinese depositary receipts:
First, in terms of periodic reports, overseas issuers are allowed to prepare periodic reports in foreign currencies.
Second, in terms of interim reporting, related party transactions with fair pricing are allowed to be summarized and disclosed only in the annual report or semi annual report; Specify that non related party transactions between the overseas issuer and its holding subsidiaries within the scope of consolidated statements or between the above holding subsidiaries shall be exempted from disclosure; For major events other than transactions, it is clear that the issuer can judge whether they constitute information to be disclosed within the scope of listed circumstances.
The third is to clarify the treatment of confidential information. If the conditions are met, the information to be disclosed belongs to trade secrets, which can be postponed or exempted from disclosure, and those belonging to state secrets can be exempted from disclosure.
Fourth, distinguish between the situations that should apply for suspension and those that can apply for suspension, and clarify the specific circumstances of suspension and resumption.
Fifth, in terms of the performance of the duties of the directors, supervisors and senior executives, the conditions for appropriately adjusting the expression of the opinions, statements or commitments confirmed by the directors, supervisors and senior executives are revised from “on the premise of not changing the substantive content” to “on the premise of conforming to the securities law”, which is more clear and specific, so as to facilitate the understanding and practice of the market subjects; At the same time, considering the principle of reciprocity, overseas issuers are not required to submit statements and commitments of directors, supervisors and senior executives.
Sixth, in terms of delisting, it defines the conditions for active delisting and compulsory delisting, the internal decision-making procedures of overseas issuers, investor protection measures to be provided, audit procedures and time limit, etc.
IV. threshold for individual investors: 500000 yuan + 2 years
The interim measures have adjusted the appropriateness standards for individual investors participating in China depositary receipts business. The average daily assets in securities accounts and capital accounts 20 trading days before the opening of application authority have been reduced from no less than 3 million yuan in Shanghai Luntong to no less than 500000 yuan, and they need to participate in securities trading for more than 24 months.
According to public information, since the introduction of relevant policies and supporting rules of Shanghai Luntong in 2018, four Shanghai listed companies have successfully issued GDR and listed on the London Stock Exchange, raising a total of US $5.84 billion. It has played a positive role in broadening two-way financing channels and supporting the development of the real economy.
The Shanghai Stock Exchange said that in the future, it will continue to promote the internationalization strategy in accordance with the unified deployment of the CSRC, continue to deepen and improve the cross-border cooperation and interconnection mechanism, enhance the global resource allocation capacity, and more efficiently serve the institutional two-way opening of the capital market.
The Shenzhen Stock Exchange said that in the next step, the relevant business rules will be modified and improved according to the opinions of all parties in the market, and officially released to the market after performing the relevant decision-making and approval procedures, so as to consolidate the institutional foundation for the interconnection of depositary receipts business into a new stage of two-way expansion.
ETF will be included in the subject of interconnection between the mainland and Hong Kong
On the same day, good news came from the interconnection between the mainland and Hong Kong markets.
In order to continuously optimize the interconnection mechanism between the mainland and Hong Kong markets and enrich the existing objects of interconnection, according to the joint announcement of the securities regulatory commissions of the two places, Shanghai Stock Exchange, Shenzhen Stock Exchange, Hong Kong Exchanges and Clearing Co., Ltd China Securities Depository and Clearing Co., Ltd. (hereinafter referred to as “Shanghai Shenzhen Hong Kong Stock Exchange and China Clearing”) has reached a consensus on the overall scheme of integrating ETF into the subject of interconnection.
The inclusion of ETF into the interconnection target is another landmark achievement of the upgrading of the interconnection mechanism, which will make the interconnection spot ecological chain more complete and further promote the mainland and Hong Kong markets to create a win-win situation. On the one hand, the inclusion of ETF into the interconnection target can enrich the investment channels and transaction varieties of domestic and foreign investors, which is conducive to more convenient and effective allocation of each other’s market resources by domestic and foreign investors; On the other hand, the inclusion of ETF into the interconnection target will further improve the investor structure and promote the healthy development of ETF market.
In the next step, Shanghai Shenzhen Hong Kong Stock Exchange and China Clearing will pay close attention to the business and technical preparations related to the inclusion of ETF into the subject matter, including modifying relevant rules and soliciting public opinions. It is expected to take about 6 months to prepare.
(Shanghai Securities News)
