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Securities trading - Hong Kong

18.09.2020

Key market-tradable securities

Denomination currency	Maturity profile	Interest rate	Interest/Dividend payment frequency	Place of settlement	Form
Certificates of Deposit
HKD or other	Variable	Fixed or floating	Quarterly, semi-annually or annually	CMU or physical	Bearer
Corporate bonds
HKD or other	Up to 7 years	Fixed or floating	Quarterly, semi-annually or annually	CMU or physical	Bearer
Exchange Fund bills
HKD or other	3/6 months or 1 year	Zero percent	-	CMU	Bearer
Exchange Fund notes
HKD or other	Up to 5 years	Fixed	Semi-annually	CMU	Bearer
Foreign currency debt
Other than HKD	Variable	Fixed or floating	Quarterly, semi-annually or annually	CMU	Bearer
Equities
HKD or other (Hong Kong Equities)	-	-	Normally semi-annually	CCASS or physical	Registered
Warrants
HKD	-	-	-	CCASS or physical	Registered
China Connect securities
RMB (Stock Connect China A-shares)	-	-	Normally semi-annually	CCASS	Registered
RMB (Bond Connect securities)	Variable	Fixed or floating	Quarterly, semi-annually, annual	CMU	Registered

Trading platforms

Hong Kong Stock Exchange - Automatic Order Matching and Execution System (AMS)

Orders are executed based on the application of a strict price and time priority methodology. Automatic order matching is effected by AMS as follows:

The priority of matching is determined by orders that reflect the best price.
The priority of orders within a queue is determined by order entry time.

These rules do not apply to odd-lot order transactions.

AMS provides remote trading for HKEx members either via terminals in the HKEx's trading hall or located remotely in their offices.

Board lots and odd lots

A “board lot” is a number of shares traded as a unit. Different stocks have a different number of shares per board lot. For various reasons, the exchange may, in conjunction with the quoted company, alter the board lot size for particular stocks from time to time, for example, when heavy rights for capitalisation issues are made. To obtain the optimum price for both buying and selling, stocks should only be held and traded in board lots. Some stocks can only be traded in board lot form.

Any number of shares less than the amount required for the board lot constitute an “odd lot”. Share scrips larger than one board lot are called “special lots”. Both are traded usually at a discount of 1-5%, depending on the circumstances. A number of odd lots can be combined if together they equal a whole board lot and are individually in good order for delivery.

Stock Connect

This program operates between the Shanghai/Shenzhen Stock Exchanges (SSE/SZSE), the Stock Exchange of Hong Kong Limited (SEHK), the China Securities Depository and Clearing Corporation Limited (ChinaClear) and the Hong Kong Securities Clearing Company Limited (HKSCC).

Quotas

Trading under Stock Connect is subject to daily net buy quota (this may be adjusted in the future), monitored on a “real-time” basis. For the Northbound Trading Link, the aggregated quote has been removed and the daily net buy quota will be limited to RMB 13 billion. All SSE/SZSE-listed shares are subject to the same trading board lot size, which is 100 shares for buy orders. For Northbound trading, buy orders can be input in multiples of board lots, while sell orders can be input in any size (that is, odd lots are allowed).

In Hong Kong, board lot and odd lot orders are matched on separate platforms. SSE and SZSE adopt a different arrangement, whereby board lot and odd lot orders in a SSE and SZSE-listed security are matched on the same platform, and subject to the same share price.

The maximum order size for Stock Connect Securities is 1 million shares and the tick size is uniformly set at RMB 0.01.

SSE/SZSE and SEHK allow investors to trade eligible shares listed on each other’s markets through local securities firms or brokers.

Applicable trading, clearing and listing rules

Trading and clearing is subject to the regulations and operational rules of the market where trading and clearing take place.

Listed companies will continue to be subject only to the listing and other rules and regulations of the markets where they are listed.

Trading Days and Hours

Shanghai-Hong Kong Stock Connect only operates on days that are trading days for both SSE and SEHK, and the banking services of both markets are open on the corresponding money settlement days:

Opening call auction: 09:15–09:25 (SEHK accepts orders at 09:10);
Continuous auction: 09:30–11:30; 13:00–15:00;
Unexecuted orders: Can be cancelled during trading hours except between 09:20–09:25;
Confirmed Orders: Not applicable.

Shenzhen-Hong Kong Stock Connect only operates on days that are trading days for both SZSE and SEHK, and the banking services of both markets are open on the corresponding money settlement days:

Opening call auction: 09:15–09:25 (SEHK accepts orders at 09:10);
Continuous auction: 09:30–11:30; 13:00–14:57;
Closing call auction: 14:57–15:00;
Unexecuted orders: Can be cancelled during trading hours except 09:20–09:25 and 14:57–15:00;
Confirmed orders: Confirmed order may be cancelled by SZSE due to the unsuccessful order validation.

Please refer to the Hong Kong Stock Exchange website for more information.

Bond Connect

China Foreign Exchange Trading System (CFETS)

Investors need to request for quotation via two global access platforms, namely Tradeweb and Bloomberg, which are linked to CFETS. The Bond Connect Market Maker (BCMM) will input quotation in CFETS. Investors confirm the trade and Tradeweb will provide the CFETS Trade Reference to the Investor. CFETS sends the trade details to CCDC/SHCH for settlement. Investors will send settlement instructions with CFETS Trade Reference to their settlement agent in Hong Kong, the settlement agent who is a CMU member will send the instructions to CMU. Based on the settlement instructions, CMU and BCMM will affirm the trade in CCDC/SHCH.

There are two CIBM trading sessions at CFETS: 09:00 to 12:00 and 13:30 to 16:30.

For Defaulted Bond on Maturity (DBM) trading, investors who wish to participate should comply with the Rules For Transfer of Defaulted Bonds on Maturity issued by CFETS, and guidebook Transfer in Defaulted Bond on Maturity at CFETS Guidebook for Bond Connect Investors. Please refer to the Bond Connect website for more information.

Bond Connect trading hours will be extended to 20:00 for trades with a settlement cycle of T+1 and beyond.