CSRC Consults on Depository Receipt Provisions Under SSE-LSE Connect
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
Previous Article
RBI Circular on Guidelines on Large Exposures Framework for BanksNext Article
Elke König of SRB Outlines Priorities for 2020Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
