SFC to receive personal details of mainland Chinese investors trading Hong Kong shares via stock connect
- The Chinese regulator will share the identity of mainland traders using the stock connect with their Hong Kong counterpart
- Watchdogs say the move will enhance cross-border security and help stamp out misconduct
Mainlanders who trade Hong Kong shares via the stock connect scheme will have their personal information shared with the Hong Kong regulator for the first time, under a new agreement.
The China Securities Regulatory Commission will collect and pass on mainland investors’ information to the Hong Kong’s Securities and Futures Commission when they are trading through the so-called “southbound” channel of the stock connect linking the Hong Kong, Shanghai and Shenzhen markets.
“The regime helps enhance market surveillance and combat cross-boundary market misconduct under stock connect,” the SFC said in a statement on Friday, the same day the two regulators entered into the agreement.
The new regime will start at the end of the first quarter of next year, the statement said.
The identification data of international investors buying and selling via the “northbound” arm of the stock connect has been available to the CSRC since September 26.
Currently, Hong Kong trading systems only show brokers' names, and the identity of clients is provided only if requested by the SFC. On the mainland, however, each investor is identified, so the CSRC knows who is behind every transaction.
SFC chief executive Ashley Alder has said previously said the identification scheme would help enhance cross-border enforcement and stamp out misconduct.
“This is critical to safeguard market integrity and to strengthen the protection of investors in both markets,” Alder said.
Alder has also said the SFC aimed to have a market consultation next year about implementing an investor identification regime to cover all trading on the Hong Kong stock exchange in the longer term, which he said was “in line with similar initiatives in other leading global markets”.
The first stock connect was introduced in November 2014, linking the Hong Kong and Shanghai markets, while a Shenzhen link was added in December 2016.
“It will mean equal treatment, with the SFC gaining mainland investors’ information as the CSRC has already got the information from the northbound trading,” said Gary Cheung Wai-kwok, chairman of the Hong Kong Securities Association.
“The new move will assist the SFC and CSRC to combat misconduct.”