Settlement services - China - B-Shares
Pre-matching service
The table below summarises CBL's pre-matching service for external settlement instructions, as well as the pre-matching method and start time in the market. For details of CBL's pre-matching services, see Pre-matching services for external settlement instructions.
| Service offered | Method employed | Start (local time) |
| B Shares | ||
Immediate Release Flag available | Automated through CSDCC | SD-1 |
| Connectivity medium | Instruction format |
Xact Web Portal | Tick to enable the “Immediate Release” option. |
Xact via SWIFT and Xact File Transfer | Field :22F::STCO/CEDE/IREL |
Procedure for the domestic counterparty
| Procedure for the domestic counterparty | Deadline | |
| Receipt in CBL / Delivery from CBL | ||
Customers must request their brokers to deliver/receive shares to/from HSBC’s clearing participant code by order of/for their account corresponding to their investor code:
Note: Customers must provide their brokers with their investor code and with HSBC’s clearing participant code 001 (Shanghai) or 890200 (Shenzhen). | Market deadline | |
Allowed countervalue difference
A maximum difference in countervalue of USD 25 (or its HKD equivalent) is allowed for the matching and settlement of against payment transactions with domestic counterparties. In the case of a discrepancy within this limit, HSBC will settle with the countervalue instructed by the CBL customer.
When inputting receipt against payment (MT541) or delivery against payment (MT543) instructions, customers must ensure that the countervalue (settlement amount) reflects the net purchase or sale amount after addition (MT541) or deduction (MT543) of the stamp duty, the brokerage commission, the stock exchange levy, the clearing fee, the administrative charge (Shanghai) and any other charge due by the investor to the executing broker.
Specific settlement rules / settlement restrictions
Note: The opening of individual investor accounts by CBL is not be permitted.
General
Against payment transactions with domestic counterparties in Shanghai (in B shares listed on the Shanghai Stock Exchange and deposited at CSDCC’s Shanghai branch) can be executed and settled in USD only.
Against payment transactions with domestic counterparties in Shenzhen (in B shares listed on the Shenzhen Stock Exchange and deposited at CSDCC's Shenzhen branch) can be executed and settled in HKD only.
As trading outside the Shanghai and Shenzhen Stock Exchanges is prohibited and due to the investor registration requirements outlined in "Investor registration and investor code" below, internal (CBL-CBL) and Bridge (CBL-Euroclear) transfers of Chinese B shares are not possible.
As outlined in Settlement process in the Market Profile - China, CSDCC does not provide a true delivery versus payment service.
CSDCC Shanghai and Shenzhen settle all transactions between the buying and selling brokers against payment only. For delivering shares free of payment from/to another CSDCC account, this is only possible without change of beneficial ownership transfer. CSDCC requires the delivering CSDCC participant to provide “convincing proof” that the owner has not changed.
Investor registration and investor code
Foreign investors are not required to obtain approval from any Chinese authorities before investing in Shanghai or Shenzhen B shares. However, the investments are subject to the investor’s application for an investor code at CSDCC Shanghai and/or Shenzhen.
All B shares to be deposited in CBL must be registered in the names of both “Clearstream” and the underlying customers. Investor codes and the relating CSDCC accounts allocated through CBL and HSBC will be opened in the following format:
Clearstream / the underlying customer’s name
N.B.: The opening of individual investor accounts by CBL is not permitted.
Customers who want to invest in both the Shanghai and Shenzhen markets must request separate investor codes for each market. Investor codes and the name associated to each investor code are used both for trading purposes and for share registration at CSDCC.
Customers must communicate their investor code to their broker before buying or selling shares on the Shanghai or Shenzhen Stock Exchanges. Customers must similarly specify their safekeeping account in each receipt or delivery instruction sent to CBL as described in the respective instruction specifications.
Investor codes are opened either in the beneficial owner’s name (institutional account) or in a nominee name. Generally, customers should request their investor code in the name of the beneficial owner. Registration in a nominee name is also possible - a CBL customer may request to open an investor code in its own institution’s name even though the shares would be beneficially owned by an underlying client of the CBL customer. For Shenzhen B shares, customers requesting registration in the nominee name must disclose, as per local regulation, the final beneficial owners to CSDCC on a quarterly basis.
Note: To avoid possible settlement delays and penalties, the name chosen for the investor code must be used for all trade orders and settlement instructions pertaining to the respective investor.
In addition to requesting separate investor codes, customers must also request that Clearstream opens a sub-account for each investor code with HSBC.
Application for a new investor code and sub-account
To apply for a new investor code and sub-account, the customer must do the following:
- Submit an MT599 free-format message to Clearstream Banking (BIC: CEDELULL) with the following details:
- Attn: Clearstream Settlement Singapore (SSS)
- Please take this MT599 as our request to apply for a new investor code for the (Shenzhen or Shanghai) market and to open a new sub-account at HSBC Bank (China) Company Limited.
And - CBL Account Number;
- Account holder's name;
- Account holder's Identification Document type (COI/others (to specify);
- Account holder's Identification Document Number (registration number or tax ID etc.);
- Account holder's address;
- Account holder's nationality/country of domicile;
- Investor code category (*To indicate “Nominee” or advise individual / fund / securities firm / other).
- "Supporting documents have been obtained from account applicants and provided to CBL, for example, copies of passport/identification card, certificate of incorporation, authorisation documents or any other documents evidencing the establishment of the institution as required under the CSDCC rules.
- "We certify that all the information provided to HSBC for the application of account opening and investor code is accurate, complete and consistent with the documents obtained from the applicant.
- "We undertake to deliver to CBL all the relevant documents as may be required by HSBC or CSDCC."
- Submit the “CSDC Account Opening Application Form”, completed in English (see attachment below); and
- Submit the following supporting documents1 to CBL (for an institution):
- Certified true copy of business registration certificate issued by the country in which the institution is incorporated, or other similar documents, evidencing the establishment of the institution;
- Letter of authorisation from the board, a director or a major shareholder of the institution, proving that the person who signs the CSDCC account opening form is an authorised person;
- Articles of Association/Board Resolution/Shareholder Meeting Resolution or other documents that can prove that the authoriser has the authority to issue the authorisation, according to CSDCC requirements (that is, authorisation documents);
- Copy of the identification of the person who signs the application form;
- Tax Registration documents (Certified Tax ID);
- Copy of Signature List.
Customers must submit all forms and relevant supporting documents to:
Clearstream Banking S.A.
Settlement Operations
Singapore branch
Republic Plaza 55-01
9, Raffles Place
Singapore 048619
Application for an investor code by customers who have an existing code with another custodian
Customers who move from another custodian to CBL can retain their existing investor code. Before the transfer from another custodian to CBL, customers must open a sub-account and request CBL to accept their existing investor code.
To apply for a sub-account and transfer the investor code from another custodian to CBL, the customer must do the following:
- Submit an MT599 free-format message to Clearstream Banking (BIC: CEDELULL) with the following details:
- Attn: Clearstream Settlement Singapore (SSS)
- Please take this MT599 as our request to open a new sub-account at HSBC Bank (China) Company Ltd and to accept the existing Investor ID from (existing Global Custodian) to CBL.
And - CBL Account Number;
- Account holder’s name (*Beneficiary name);
- Account holder’s Identification Document type (COI or other (specify) (*All the previously submitted information must be indicated);
- Account holder’s Identification Document No. (registration number, tax ID etc.) (*All the previously submitted information must be indicated);
- Account holder’s address;
- Account holder’s nationality or country of domicile (*Customer needs to indicate his/her nationality or country of domicile as per previous Investor ID application);
- Investor code category (*To indicate “Nominee” or advise fund, securities firm or other);
- Existing Investor ID.
- "Supporting documents have been obtained from account applicants and provided to CBL, for example, copies of passport/identification card, certificate of incorporation, authorisation documents or any other documents evidencing the establishment of the institution as required under the CSDCC rules.
- "We certify that all the information provided to HSBC for the application of account opening and investor code is accurate, complete and consistent with the documents obtained from the applicant.
- "We undertake to deliver to CBL all the relevant documents as may be required by HSBC or CSDCC."
Note: All the above information should be identical to that previously registered with CSDCC.
- Submit the following supporting documents1 to CBL (for an institution):
- Certified true copy of business registration certificate issued by the country in which the institution is incorporated, or other similar documents, evidencing the establishment of the institution;
- Letter of authorisation from the board, a director or a major shareholder of the institution, proving that the person who is opening the sub-account is indeed an authorised person;
- Articles of Association/Board Resolution/Shareholder Meeting Resolution or other documents that can prove that the authoriser has the authority to issue the authorisation, according to CSDCC requirements (that is, authorisation documents);
- Certified true copy of the identification of the person who is opening the sub-account;
- Tax Registration documents (if existing investor ID was opened using tax ID);
- Copy of Signature List.
Customers must submit all forms and relevant supporting documents to:
Clearstream Banking S.A. Singapore Branch
Attn: Settlement Operations
9, Raffles Place
#55-01 Republic Plaza
Singapore 048619
Update to account information
A request for updating account information must include the following:
- Account holder's name;
- Investor code and account number;
- The “CSDC Account Info Change & Closure Application Form” completed in English (attached below);
- The following supporting documents1 addressed to CBL (for an institution):
- Certified true copy of business registration certificate issued by the country in which the institution is incorporated, or other similar documents, evidencing the establishment of the institution;
- Letter of authorisation from the board, a director or a major shareholder of the institution, proving that the person who signs the CSDCC account opening form is an authorised person;
- Articles of Association, Board Resolution, Shareholder Meeting Resolution or other documents that proves that the authoriser has the authority to issue the authorisation according to CSDCC requirements (that is, authorisation documents);
- Information to be updated (for example, for a name change, a certified true copy of the change certificate issued by the country where the institution is incorporated or other similar documents, evidencing the change of the name of the institution).
Account closure
A request for closing an account must include the following:
- Account holder's name;
- Investor code and account number;
- The “CSDC Account Info Change & Closure Application Form” completed in English (attached below);
- The following supporting documents1 addressed to CBL (for an institution):
- Certified true copy of business registration certificate issued by the country in which the institution is incorporated, or other similar documents, evidencing the establishment of the institution;
- Letter of authorisation from the board, a director or a major shareholder of the institution, proving that the person who signs the CSDCC account opening form is an authorised person;
- Articles of Association, Board Resolution, Shareholder Meeting Resolution or other documents that proves that the authoriser has the authority to issue the authorisation, according to CSDCC requirements (that is, authorisation documents).
New investor code and account for a merged company
If a new investor code and account in the name of a merged company are required:
Whether an NCBO transfer is applicable to both Shanghai and Shenzhen exchange is based on the approval by the CSDC.
Shenzhen (NCBO FOP): NCBO must be approved by CSDC Shenzhen on a case by case basis before the transfer is taking place. NCBO asset transfer in the Shenzhen market must meet the below criteria:
- The delivery investor code is a nominee account.
- The delivery account holder discloses the ultimate beneficiary information, such as, name and holdings to CSDC Shenzhen through their current subcustodian on quarterly basis.
The account to be transferred is a nominee account or account in the name of ultimate beneficiary itself.
Shanghai (NCBO FOP): No supporting document is required but the customer must state in their instructions if the asset transfer is on NCBO basis.
Consolidation of investor code and account when the beneficial owner does not change
To consolidate an investor code and account when the beneficial owner does not change:
- Accounts and investor codes must be in the same name.
- Provide instructions that contain the account number and investor codes that are to be merged.
Investor code allocations and the associated account opening will generally take between one and two weeks. The customer's account in CBL will not be eligible to hold or settle B shares either prior to the allocation of an investor code or prior to the associated account opening in Shanghai or Shenzhen.
Customers are liable for the usage of any safekeeping accounts obtained through CBL and HSBC. Clearstream Banking shall bear no responsibility due to any illegitimate or erroneous use - for any trading or other purpose - of such safekeeping accounts. CBL does not validate whether the safekeeping accounts that customers use in their settlement instructions sent to CBL represent the legitimate investor who ordered the underlying transaction. Clearstream Banking shall therefore not be responsible if the customer uses a safekeeping account belonging to an investor other than the investor on whose behalf the related transaction has been or was deemed to be executed or settled.
Contract stamp duty and other charges
The contract stamp duty payable will be 0.1% of the underlying value of a B share transaction. It is payable by the seller and should normally be included in the net settlement amount that the broker confirms to the investor.
The broker should equally include the following dealing charges in the net settlement amount. Again, all of these charges are payable twice (that is, by the buyer and by the seller).
- The brokerage commission (currently does not exceed 0.3% of the gross settlement amount and cannot be lower than the stock exchange levy and CSRC administration charges, with a minimum fee of USD 1 for Shanghai and HKD 5 for Shenzhen).
- The stock exchange levy (currently 0.0487% of the gross settlement amount for trades executed, with 70% of the standard fee on block trade on the Shanghai Stock Exchange and 50% for block trade on the Shenzhen Stock Exchange).
- The clearing fee - 0.002% of the gross settlement amount, with a maximum of USD 50 for trades executed on the Shanghai Stock Exchange. 0.05% of the gross settlement amount, with a maximum of HKD 500 for trades executed on the Shenzhen Stock Exchange.
- An administrative charge (levied by the China Securities Regulatory Commission) of 0.002% of the gross settlement amount for trades executed at Shenzhen Stock Exchange.
Out-of-pocket expenses
Out-of-pocket expenses, if and when incurred by the CSDCC, will be charged back to the customer and will include:
- An account opening fee that is payable each time an account corresponding to a new institutional investor code is opened as follows:
- USD 85 for CSDCC Shanghai; and
- HKD 580 for CSDCC Shenzhen;
- A non-trade transfer fee in the case of a share transfer without a change in beneficial ownership. Per transferred line of shares, the fee currently amounts to USD 30 in Shanghai and HKD 100 in Shenzhen;
Management of failed instructions
Unconfirmed receipt instructions with domestic counterparties remain pending until they are settled or until they are cancelled. CBL reserves the right to cancel customers' receipt instructions with domestic counterparties that have not been settled by the fifth business day after the requested settlement date and that have not been re-confirmed by the customer.
Delivery instructions that have not been settled following their successful provisioning are cancelled and will be re-credited to the customer's account (generally on the second business day following their transmission to HSBC).
Short selling and long purchases (that is, purchases without sufficient funds) are prohibited on the Shanghai and Shenzhen Stock Exchanges.
Customers with investor codes allocated via CBL must ensure that settlement instructions for any trades executed with such investor codes are complete and submitted to CBL in good time. Late or wrong settlement instructions may result in sell-outs or buy-ins and in additional CSDCC penalties charged to HSBC. HSBC and CBL will pass on such penalties to the underlying customer.
For detailed information, please refer to “Failed Trades and Buy-in Regulations” under Settlement process.
New issues settlement
Customers who successfully tender for a new issue should instruct their agent to deliver the shares to HSBC's clearing participant code for the account corresponding to their investor code. No special information is required other than the normal settlement receipt instruction.
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1. All supporting documents must be either notarised or certified true copy.