Wealth Link Securities Limited

Tutorial Room

Overview

To facilitate Hong Kong and overseas investors trading in SSE Securities through Shanghai Connect (i.e. Northbound trading), SEHK has established an SEHK Subsidiary in Shanghai, whose principal function is to receive orders to trade in SSE Securities from SEHK Participants and route them onto SSE’s trading platform for matching and execution on SSE. Upon trade execution, trade confirmation received from SSE will be sent to SEHK Participants. For Shenzhen Connect, SEHK has established another SEHK Subsidiary in Qianhai Shenzhen, whose principal function is to receive orders to trade in SZSE Securities from SEHK Participants and route them onto SZSE’s trading platform for matching and execution on SZSE.

Same as the current arrangement for trading Hong Kong stocks, investors who want to participate in Shanghai and Shenzhen Connect will trade through SEHK Participants. Investors should check with their SEHK Participants on any specific conditions that their SEHK Participants may require them to satisfy before accepting their Northbound orders.

Northbound trades are executed on the SSE / SZSE platform, and therefore follow the SSE / SZSE market practices in general. The following sections explain the market practices that are applicable to Northbound and Southbound under Shanghai and Shenzhen Connect.

Eligible Stocks for Shanghai-Hong Kong / Shenzhen-Hong Kong Stock Connect

	Northbound Trading	Southbound Trading
Constituent stock of relevant indices	SSE: SSE 180 Index and SSE 380 Index SZSE: All the constituent stocks of the SZSE Component Index and the SZSE Small / Mid Cap Innovation Index which have a market capitalization of not less than RMB 6 billion *	Hang Seng Composite LargeCap Index and Hang Seng Composite MidCap Index
A+H shares	All the SSE-listed and SZSE-listed A shares that are not included as constituent stocks of the relevant indices but which have corresponding H shares listed on SEHK	All H shares that are not included as constituent stocks of the relevant indices but which have corresponding shares in the form of SSE-listed Shares / SZSE-listed Shares
Except	SSE-listed / SZSE-listed shares which are not traded in RMB and SSE-listed / SZSE-listed shares which are included in the “risk alert board”	Hong Kong shares that are not traded in Hong Kong dollars (HKD); H shares which have corresponding shares listed and traded on an exchange in Mainland China other than SSE / SZSE; and H shares which have corresponding A shares put under “risk alert”
Eligible Stocks (updated by HKex)

* ChiNext Stocks of Shenzhen Stock Exchange (SZSE) which may only be traded by institutional professional investors in the initial stage

Investors will only be allowed to sell an SSE / SZSE Security but restricted from further buying if:

The SSE / SZSE Security subsequently ceases to be a constituent stock of the relevant indices; and/or
The SSE / SZSE Security is subsequently under “risk alert”; and/or
The corresponding H share of the SSE / SZSE Security subsequently ceases to be traded on SEHK.

Northbound Trading Details

Northbound Trading Details
Trading Currency	RMB
Stock Code	6 digits
Order type	Only limit orders
Order amendment	Cannot be amended
Tick Size	RMB 0.01
Price Limit	General price limit of ±10% based on previous closing price Special Price Limit: ±5% for ST and *ST stock
Dynamic Price Check	The dynamic price checking at 3%
Board Lot Size	100 shares per lot
Upper limit for Order size	1,000,000 shares
Odd Lot trade	For sell order only
Money Settlement	T+1
Securities Settlement	T
Day (Turnaround) Trading	Day trading is not allowed. Buying Securities on T-day can only sell the shares on and after T+1
Block Trade	Not available
Short Sell	Not provided in CHIEF
Margin Trading	Not provided in CHIEF
Initial Public Offering	Not available
Shareholder Voting Instructions	HKSCC will consolidate the voting instructions from CCASS Participants and endeavor to submit a combined single voting instruction (with ‘For’ and/or ‘Against’ votes together with ‘Abstain’ and/or cumulative votes if applicable) to the relevant SSE-listed / SZSE-listed company via the designated on-line voting platform.

Quota

Quota
Daily quota	The Northbound Daily Quota is set at RMB 13 billion for each of Shanghai Connect and Shenzhen Connect, and the Southbound Daily Quota is set at RMB 10.5 billion for each of Shanghai Connect and Shenzhen Connect.
Principle	Apply on a “net buy” basis Investors will always be allowed to sell their cross-boundary securities regardless of the quota balance
Daily quota	SEHK monitors the usage of the Northbound Daily Quota on a real time basis and the Northbound Daily Quota Balance will be updated on HKEx website every minute: Daily Quota Balance = Daily Quota – Buy Orders + Sell Trades + Adjustments Daily Quota will be refreshed and remain the same every day, subject to the balance of the Aggregate Quota. Unused Daily Quota will NOT be carried over to next day’s Daily Quota. Once the Northbound Daily Quota Balance drops to zero or is exceeded during a continuous auction session (Continuous Trading), no further buy orders will be accepted for the remainder of the day. Subject to the Aggregate Quota Balance, SEHK will resume the Northbound buying service on the following trading day. Once the Northbound Daily Quota Balance drops to zero or the Daily Quota is exceeded during the opening call session, new buy orders will be rejected. However, as order cancellation is common during opening call auction, the Northbound Daily Quota Balance may resume to a positive level before the end of the opening call auction. When that happens, SEHK will again accept Northbound buy orders. It should be noted that buy orders already accepted will not be affected by the Daily Quota being used up and will remain on the order book of SSE / SZSE unless otherwise cancelled by the relevant EPs.

Quota

Daily quota

The Northbound Daily Quota is set at RMB 13 billion for each of Shanghai Connect and Shenzhen Connect, and the Southbound Daily Quota is set at RMB 10.5 billion for each of Shanghai Connect and Shenzhen Connect.

Principle

Apply on a “net buy” basis
Investors will always be allowed to sell their cross-boundary securities regardless of the quota balance

Daily quota

SEHK monitors the usage of the Northbound Daily Quota on a real time basis and the Northbound Daily Quota Balance will be updated on HKEx website every minute:

Daily Quota Balance = Daily Quota – Buy Orders + Sell Trades + Adjustments

Daily Quota will be refreshed and remain the same every day, subject to the balance of the Aggregate Quota. Unused Daily Quota will NOT be carried over to next day’s Daily Quota.

Once the Northbound Daily Quota Balance drops to zero or is exceeded during a continuous auction session (Continuous Trading), no further buy orders will be accepted for the remainder of the day. Subject to the Aggregate Quota Balance, SEHK will resume the Northbound buying service on the following trading day.

Once the Northbound Daily Quota Balance drops to zero or the Daily Quota is exceeded during the opening call session, new buy orders will be rejected. However, as order cancellation is common during opening call auction, the Northbound Daily Quota Balance may resume to a positive level before the end of the opening call auction. When that happens, SEHK will again accept Northbound buy orders.
It should be noted that buy orders already accepted will not be affected by the Daily Quota being used up and will remain on the order book of SSE / SZSE unless otherwise cancelled by the relevant EPs.

Shareholding Restrictions on SSE / SZSE Securities

All foreign investors’ shareholding in the A shares of a listed company is not allowed to exceed 30% of its total issued shares;
A single foreign investor’s shareholding in a listed company is not allowed to exceed 10% of the company’s total issued shares;
SSE / SZSE Securities purchased through Shanghai-Hong Kong / Shenzhen-Hong Kong Stock Connect will be considered in totality with those purchased by QFII and RQFII, and be subject to the same foreign shareholding restriction. Once SSE / SZSE informs SEHK that the aggregate foreign shareholding of an SSE / SZSE Security reaches 28%, further Northbound buy orders in that SSE / SZSE Security will not be allowed, until the aggregate foreign shareholding of that SSE / SZSE Security is sold down to 26%. If the 30% threshold is exceeded due to Shanghai-Hong Kong / Shenzhen-Hong Kong Stock Connect, HKEx will identify the relevant EP and require it to follow the force-sell requirements.

Trading Arrangements

Trading hours

Northbound trading will follow SSE’s / SZSE’s trading hours as below:

SSE / SZSE Trading Session	SSE Trading Hours	SZSE Trading Hours	Time for EPs to input Northbound orders
Opening Call Auction	09 : 15 – 09 : 25	09 : 15 – 09 : 25	09 : 10 – 11 : 30
Continuous Auction (Morning)	09 : 30 – 11 : 30	09 : 30 – 11 : 30	09 : 10 – 11 : 30
Continuous Auction (Afternoon)	13 : 00 – 15 : 00	13 : 00 – 14 : 57	12 : 55 – 15 : 00
Closing Call Auction	-	14 : 57 – 15 : 00	-

Remark :

During 09 : 20 – 09 : 25, 14 : 57 – 15 : 00, SSE / SZSE will not accept order cancellation
During 09 : 10 – 09 : 15, 09 : 25 – 09 : 30 and 12 : 55 – 13 : 00, orders and order cancellations can be accepted by SEHK but will not be processed by SSE / SZSE until SSE’s / SZSE’s market open. Any buy or sell orders not executed during the opening call auction session will automatically enter the continuous auction session. For SZSE, Any buy or sell orders not executed during the continuous auction session will automatically enter the closing call auction session.

Holiday Arrangement

In the initial stage of operation of Shanghai-Hong Kong/ Shenzhen-Hong Kong Stock Connect, investors will only be allowed to trade on the other market on days where both markets are open for trading, and banking services are available in both markets on the corresponding settlement days. The following table illustrates the holiday arrangement of Northbound trading of SSE / SZSE Securities:

	Mainland	Hong Kong	Open for Northbound Trading？
Day-1	Business Day	Business Day	Yes
Day-2	Business Day	Business Day	No (HK market closes on money settlement day)
Day-3	Business Day	Holiday	No (HK market closes on trading day)
Day-4	Holiday	Business Day	No (Mainland market closes)

Trading Calendar

Severe Weather Conditions

The trading arrangement under severe weather conditions will be as follows:

Scenarios	Northbound trading of SSE / SZSE securities	HKEX
Black rainstorm issued before HK market opens (i.e. 9:00 a.m.) and discontinued after 12:00 noon	Not open	Not open
T8 issued between 9:00 a.m. and 9:15 a.m.	Not open	Trading in the securities market will be terminated at the end of the Pre-opening Session.
T8 issued after SSE / SZSE market opens (i.e. 9:15 a.m.）	Trading will continue for 15 minutes after T8 issuance, thereafter, only order cancellation is allots till SSE / SZSE market close	Trading will be terminated in 15 minutes.
Black rainstorm issued after HK market opens (i.e. 9:00 a.m.)	Trading continue as normal	Trading continue as normal
T8 / Black rainstorm discontinued at or before 12:00 noon	Trading resumes after 2 hours	Trading resumes after 2 hours
T8 / Black rainstorm discontinued after 12:00 noon	Not open	Not open

Fees and Levies

Fees and Levies

Fees and levies related to Northbound trades under Shanghai-Hong Kong Stock Connect as follows:

Items	Rate	Charged by
Handling Fee	0.00487% of the consideration of a transaction per side	SSE / SZSE
Securities Management Fee	0.002% of the consideration of a transaction per side	CSRC
Transfer Fee	0.002% of the consideration of a transaction per side 0.002% of the consideration of a transaction per side	chinaclear HKSCC
Stamp Duty	0.1% of the consideration of a transaction on the seller	SAT

Tax

Fees and taxes to be confirmed with the relevant regulators / authorities:

Items	Description	Charged by
NEW CCASS Fee	A new fee for providing depository and nominee services to CPs for SSE / SZSE securities Subject to SFC’s approval	HKSCC
Dividend Tax	Applicable to cash dividend and bonus issue Subject to clarification with SAT	SAT
Capital Gain Tax	Applicable to share disposal Subject to clarification with SAT	SAT

Northbound Trading Important Notice

It should be noted that the current Investor Compensation Fund will not cover any Northbound activities.
Similar to any overseas investment which involves a sub-custody arrangement, investors will also be facing the counterparty risks of any additional parties along the value chain, and in this case China Clear which is the central registration company in the Mainland.