China issues rules for Shanghai-London stock connect

By BLOOMBERG

HONG KONG • China published rules for a cross-listing programme between exchanges in Shanghai and London, clearing the way for companies to press ahead with plans to debut on each other’s bourses.

Eligible firms will have to meet thresholds and will be limited in how many shares they can issue, the China Securities Regulatory Commission said in a statement last Friday, without giving details. Investors can swap their London-listed depositary receipts for company stock 120 days after a new listing, down from six months in previous draft rules.

The regulations also limit the difference in the issue price between the depositary receipts and their underlying stock.

The link, which has been in the works since 2015, is another part of the push by Chinese authorities to connect their capital markets with the rest of the world. In recent weeks, regulators have made it easier for foreigners to trade the nation’s bond market, Premier Li Keqiang vowed to speed up financial opening, and FTSE Russell added Chinese-listed shares to its global benchmarks.

President Xi Jinping is pushing ahead with longstanding pledges to liberalise the financial sector in the face of a worsening trade relationship with the US, which has seen President Donald Trump and his administration criticise China for gaining what they see as unfair advantages in global commerce.