China Unveils Rulebook for Shanghai-London Stock Connect

(Bloomberg) -- China published rules for a cross-listing program between exchanges in Shanghai and London, clearing the way for companies to press ahead with plans to debut on each other’s bourses.

Companies will have to meet certain thresholds and will be limited in how many shares they can issue, the China Securities Regulatory Commission said in a statement late Friday, without giving details. Investors can swap their London-listed depositary receipts for company stock 120 days after a new listing, down from six months in previous draft rules.

“We welcome the shorter conversion period,” said Gary O’Brien, head of clearing and custody product at BNP Paribas SA in Hong Kong. “This shows the authorities are truly listening to the needs of investors when designing the scheme” and that they want to increase participation from international investors, he said.

The link, which has been in the works since 2015, is the latest effort by Chinese authorities to connect their capital markets with the rest of the world. Over recent weeks, regulators have made it easier for overseas investors to trade in China’s $12 trillion bond market, Premier Li Keqiang vowed to speed up financial opening, and FTSE Russell joined MSCI Inc. in adding Chinese-listed stocks to global indexes.

President Xi Jinping is pushing ahead with long-standing pledges to liberalize the financial sector in the face of a worsening trade relationship with the U.S., where President Donald Trump and his administration have criticized China for gaining what they see as unfair advantages in global commerce.

So far, only Huatai Securities Co., China’s third-largest brokerage by market value, has said it plans to list in London using the link. The stock connect may be operational as early as Dec. 3, China’s state-run Shanghai Securities News reported in September, without saying where it got the information.

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