Shanghai-Hong Kong Stock Connect was announced in April 2014 and went live in November. One of the main benefits of this mutual market access programme is that offshore investors are able to gain access to the China A-share market through their Hong Kong broker relationships, where they previously may not have been able to do so.

There were a number of challenges that needed to be addressed for market participants to prepare for such a significant market change, which essentially saw two exchanges with different trading rules and technologies coming together, says Stephen Pemberton, managing director, head custody clearing & collateral services transaction banking at Standard Chartered.

“As expected, some market participants are taking a wait-and-see approach. Nevertheless, this is a huge milestone, not just in Asia, but also for global financial markets as it is the first exchange link up of its kind.”

Operationally, cross-boundary trades follow the settlement cycle of the respective market – for example, in Hong Kong A-share trades settle on transaction day and money settlement takes place on T+1, adds Soh Ee Fong, head securities & fiduciary services global transaction services DBS Bank.

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