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CSRC Finalizes Provisions for Stock Connect

China’s top securities regulator China Securities Regulatory Commission (CSRC) has revised provisions of the Stock Connect program between domestic and overseas stock exchanges to expand its scope, according to an official statement.

According to the new provisions released by the CSRC, eligible companies listed on the Shenzhen Stock Exchange will be included, along with stock exchanges in Switzerland and Germany. Previously, only companies listed on the Shanghai and London stock exchanges can participate in Stock Connect. 

Companies listed in the UK, Switzerland, and Germany and “potentially other major markets in Europe” will be able to apply to issue China Depositary Receipt (CDR) in China.

The new provisions, which are already in force, introduce arrangements for allowing overseas issuers to raise capital in the domestic market through CDR offerings and adopt a market-inquiry pricing mechanism.

More enhanced and more flexible ordering are also made for annual report disclosure requirements and the disclosure of changes in shareholding.

Considering that the quota for eastbound and westbound business is still ample, the total cross-border capital quota for the existing interconnected depositary receipt business remains unchanged.

The quota for eastbound business remains at 250 billion yuan (about 39.26 billion U.S. dollars), while that for westbound remains at 300 billion yuan.

Adjustments will be made in terms of market demands and business specific issues, according to the statement.