INTERNATIONAL: CSDC Publish Rules for the Implementation of Registration, Depository and Settlement Business of the Stock Connect between Chinese Mainland and Hong Kong

China Securities Depository and Clearing Corporation Limited (CSDC) has published rules for the implementation of registration, depository and settlement business of the stock connect between China and Hong Kong.

To participate in HK-SH northbound trading, HKSCC shall apply for the settlement participant qualifications granted by CSDC, and submit the following written application materials to CSDC:

• Reply of China Securities Regulatory Commission (CSRC) on HKSCC’s participation in HK-SH northbound trading business;
• Application for Settlement Participant Qualifications;
• Company registration certificate and commercial registration certification documents notarized by China Legal Service (Hong Kong) Limited;
• Proposal in relation to the voting of the board of directors on approving HKSCC’s application for becoming a settlement participant of CSDC;
• Legal opinion issued by a law firm in Hong Kong with respect to HKSCC’s application to CSDC for settlement participant qualifications;
• Overview of HKSCC’s business operations, including but not limited to corporate profile, organization structure, management team and business operation procedures;
• Relevant financial audit materials in the recent two years;
• Letter of authorization issued by the board of directors or directors and valid identity certification documents of the authorizer;
• The handler’s valid identity certification documents and copies;
• Executed agreement on securities fund settlement;
• Latest memorandum of association of the company and notarial deed;
• Documents of Hong Kong Securities and Futures Commission (SFC) approving HKSCC’s preparation for SH-HK Stock Connect;
• The company’s notes to internal settlement risk control system, including, among others, settlement technique facilities and staffing of settlement department; measures for prevention and monitoring of risks relating to settlement business; emergency response plan for abnormal circumstances; major risk control rules; and
• Other materials as required by CSDC.

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