London-Shanghai Stock Link May Start December, China Media Says

(Bloomberg) -- A system that will allow Chinese and U.K. companies to list in each other’s stock market could begin as early as Dec. 3, according to Chinese state-run media, a long-awaited step in the Asian nation’s move to open up its financial system.

U.K.-listed firms with a market value of at least 20 billion yuan ($2.9 billion) would be able to issue depositary receipts, the Shanghai Securities News reported Thursday, without saying where it got the information. The newspaper said investors with a minimum 3 million yuan in securities and fund accounts can buy the shares. This is the first time specific requirements have been reported.

The London-Shanghai stock link, in the works since at least September 2015, is part of a broader effort by Chinese authorities to increase access to the country’s financial system. Huatai Securities Co., China’s third-largest brokerage by market value, on Tuesday said it plans to sell at least $500 million of global depositary receipts and list on the London Stock Exchange, and other companies are looking to do the same, people with knowledge of the matter said earlier this month.

Companies seeking to issue depositary receipts in China must be listed for at least three years and the issuance must be at least 500 million yuan, according to the report. The depositary receipts will be subject to a daily price change limit of 10 percent, in line with shares listed on the Shanghai and Shenzhen exchanges, it said.

People’s Bank of China Governor Yi Gang said in April that China aimed to launch the link this year, timing that was reiterated by Premier Li Keqiang during an official visit by British Foreign Secretary Jeremy Hunt in July.

Chinese companies wishing to list in London will need to already be on the Shanghai Stock Exchange, worth at least 20 billion yuan, and won’t be able to issue more than 15 percent of their total share capital in the U.K., London Stock Exchange Group Plc said in May.

©2018 Bloomberg L.P.