Update | ‘Through train’ direct share-trading between Hong Kong and Shanghai ready within six months

New rules to allow direct share trading between Hong Kong and Shanghai could be in place within six months, market regulators said yesterday, in a move that sweeps aside capital controls on up to 550 billion yuan (HK$692 billion) of stock transactions.

The so-called "through train" scheme, first floated in 2007 and which directly links the two stock exchanges, was formally announced by regulators after Premier Li Keqiang told the Boao investor forum in Hainan that the bourses would join forces.

Under the scheme, mainlanders will be allowed to trade a total quota of 250 billion yuan worth of Hong Kong stocks, subject to a maximum of 10.5 billion yuan a day, through mainland brokers.

They will place the orders with the Shanghai Stock Exchange, which will then pass them on to Hong Kong Exchanges and Clearing (HKEx).

Hong Kong investors will be able to trade up to 300 billion yuan of A-shares - subject to a maximum of 13 billion yuan a day - through Hong Kong brokers, who will place the orders with HKEx, which will pass them on to the Shanghai bourse.

A total of 266 Hong Kong- listed stocks and 560 mainland A-shares are included in the scheme, as well as the constituent stocks of major indexes.

The "through train" plan was first proposed in August 2007, but Beijing dropped it four months later over concerns it would surrender too much control over cross-border flows of its tightly managed currency.