Chinese Mainland, Hong Kong Bourses to Add ETFs to Stock Connect Scheme

What’s new: The stock exchanges of Shanghai, Shenzhen and Hong Kong as well as China Securities Depository and Clearing Corporation (CSDC) have reached a deal on adding exchange-traded funds (ETFs) to Stock Connect schemes.

The three bourses and CSDC “will work closely on the details of inclusion, including business and technical preparations such as amendments to relevant rules,” according to a statement issued Friday by Hong Kong Exchanges and Clearing Ltd. Such process will need an estimated six months to complete to help “expand and enhance the landmark mutual market access programme” between the capital markets of the mainland and Hong Kong, the statement said.

“As a key enhancement of Stock Connect, the inclusion of ETFs will provide investors with more options by broadening the existing Connect product ecosystem as well as support the continued development of both markets,” the statement said.

The background: As China aims to further open up its financial markets, Hong Kong and Shenzhen bourses widened access to each other’s investors with a deal last August, with the first four ETFs approved to be listed on the bourses.

Last week, China’s securities regulator said in a statement that the country plans to expand a program linking the Shanghai and London stock exchanges to incorporate bourses in Shenzhen, Switzerland and Germany as part of continuing efforts to open China’s capital markets and “facilitate cross-border investment and financing.”

Quick Takes are condensed versions of China-related stories for fast news you can use.

Contact reporter Cai Xuejiao (xuejiaocai@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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