General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
August 31, 2018

CSRC proposed provisions on the supervision and administration of depository receipts under the stock connect scheme between Shanghai Stock Exchange, or SSE, and London Stock Exchange, or LSE, (for trial implementation). The aim of these measures is to regulate the issuance, trading, cross-border conversion, information disclosure, and other activities in relation to depository receipts. CSRC drafted the provisions on the basis of the administrative measures of offering and trading of depository receipts (for trial implementation; the Administrative Measures, CSRC Order No. 143). The public consultation ends on September 15, 2018 and the provisions shall take effect as of the date of release.

Shanghai-London Stock Connect is a market connect scheme between the SSE and the LSE, allowing listed companies of the two markets to cross-list depository receipts. The draft provisions contain 30 articles on the following aspects:

  • Establishing the review and approval regime for Chinese Depository Receipt (CDR) issuance under the Shanghai-London Stock Connect. CDR issuance under the Shanghai-London Stock Connect shall comply with the applicable regulatory requirements for public offering of CDRs specified in the Administrative Measures. The draft provisions specify the required application documents, review and approval procedure, sponsors, due diligence, accounting and auditing requirements, and amount cap on CDRs in proposed issuance, among others.
  • Setting up the cross-border conversion mechanism for CDRs. On the basis of the Administrative Measures, the provisions specify the two types of cross-border conversions (namely creation and redemption), set forth the eligibility criteria and registration requirements for Chinese Mainland securities companies to engage in such business, and put forward the code of conduct for cross-border conversion institutions regarding assets custody and overseas investments.
  • Clarifying continuing regulatory and supervisory requirements for CDRs. The continued regulation and supervision of CDRs is in line with the applicable provisions on overseas listed red-chip companies, as stipulated in the implementing measures for ongoing supervision of innovative enterprises following listing of domestically offered stocks or depository receipts (for trial implementation). 
  • Setting up regulatory framework for Global Depository Receipt (GDR) issuance by domestic listed companies. Domestic GDR issuers are subject to regulations applicable to overseas listing. Given that GDRs are convertible with tradable A-shares in the Chinese Mainland market, the draft provision balances between preventing regulatory arbitrage and upholding commercial viability and puts in place defined terms on GDR issuance conditions, offering price, lock-up period for redemption, and requirements on foreign securities companies and depository banks.
  • Reinforcing enforcement activities against misconduct, with clearly defined legal responsibilities. On the basis of the Administrative Measures, the draft provisions specify the regulatory requirements on cross-border conversion institutions and specify the legal responsibilities of all relevant market participants within the framework of the Securities Law.


Related Links

Comment Due Date: September 15, 2018

Effective Date: Release Date of Final Provisions

Keywords: Asia Pacific, China, Securities, Depository Receipts, CDRs, GDRs, Administrative Measures, CSRC

Related Insights

EBA Finalizes Guidelines on the STS Criteria in Securitization

EBA published the final guidelines that provide a harmonized interpretation of the criteria for a securitization to be eligible as simple, transparent, and standardized (STS) on a cross-sectoral basis throughout EU.

December 12, 2018 WebPage Regulatory News

OSFI Sets Domestic Stability Buffer for D-SIBs at 1.75%

OSFI set the level for the Domestic Stability Buffer at 1.75% of total risk-weighted assets, as calculated under the Capital Adequacy Requirements (CAR) Guideline.

December 12, 2018 WebPage Regulatory News

FSI Publishes Paper on Proportionality in Insurance Solvency Rules

FSI published a paper on proportionality in the application of insurance solvency requirements.

December 11, 2018 WebPage Regulatory News

BCBS Updates Framework for Pillar 3 Disclosure Requirements

BCBS published the updated framework for Pillar 3 disclosure requirements.

December 11, 2018 WebPage Regulatory News

EBA Issues Revised List of Validation Rules for Reporting

EBA revised the list of validation rules in its implementing technical standards on supervisory reporting.

December 11, 2018 WebPage Regulatory News

IMF Reports Assess the Stability of Financial System in Brazil

IMF published a report on the results of the Financial System Stability Assessment (FSSA) on Brazil.

December 11, 2018 WebPage Regulatory News

FED Governor Examines Pros of Imposing Capital Buffers on Large Banks

At the Peterson Institute for International Economics in Washington D.C., the FED Governor Lael Brainard summarized the financial stability outlook, highlighted areas where financial imbalances seem to be building, and touched on the related policy implications.

December 07, 2018 WebPage Regulatory News

US Agencies Propose Rule on Appraisals for Real Estate Transactions

US Agencies (FDIC, FED, and OCC) proposed a rule to increase the threshold level at or below which appraisals would not be required for the residential real estate transactions from USD 250,000 to USD 400,000. Comments will be accepted for 60 days from publication in the Federal Register.

December 07, 2018 WebPage Regulatory News

EBA Single Rulebook Q&A: First Update for December 2018

This week one answer was published as part of the Single Rulebook Questions and Answers (Q&A).

December 07, 2018 WebPage Regulatory News

FED Updates Reporting Form and Instructions for FR Y-14Q

FED published the updated reporting form FR Y-14Q for Capital Assessment and Stress Testing, along with the associated instructions.

December 06, 2018 WebPage Regulatory News
RESULTS 1 - 10 OF 2325