Chinese depositary receipts could be tool to accelerate Shanghai-London trading link
As time difference, capital flow and settlement issues prove stumbling blocks to the planned scheme, experts say CDRs might help manage volumes
Regulators may introduce Chinese depositary receipts (CDRs) as a tool to accelerate the proposed London-Shanghai stock connect scheme, according to analysts.
Exchange officials from Britain and China have been busy since last September planning the connect scheme, which would enable investors on both sides to directly trade stocks listed on each others’ market.
But issues including the time difference, capital flow and settlement have proved tricky to solve.
China’s central bank, the People’s Bank of China, said on Tuesday it would consider introducing CDRs — stock trading certificates, similar to the US-traded ADRs — into the onshore market to allow “eligible foreign companies to issue shares in China”, as the country continues pushing for further opening up of its capital market.
Mainland financial media site Caixin quoted Liu Shiyu, chairman of the China Security Regulatory Commission, as saying in Shanghai on Wednesday, that China will “fully support Chinese bourses’ opening up and international cooperation” .
Keith Pogson, a senior partner at accounting firm EY, said: “The CDR could be one way of accelerating a London connect scheme.
“The critical Brexit referendum tomorrow may have an impact as to how quickly that could be implemented,” he said.
