Stock Connect Delayed by Regulatory Approvals

In a statement, HKEx said that both parties were ready to go, but were still awaiting regulatory approval from Chinese regulators.

Stock Connect will open up mainland China's markets to an unprecedented degree, allowing firms trading through a broker on HKEx to access liquidity for large-cap stocks listed in Shanghai, and for mainland Chinese investors to access Hong Kong-listed stocks. Currently, foreign investors must undergo a lengthy approval process by Chinese regulators, and are subject to strict quotas. The new program is designed to be complementary to the existing scheme.

The two parties agreed the deal in April 2014 and specified six months for enactment, leading many to say that October would be the go-live month. However, the Asian Securities Industry and Financial Markets Association (Asifma) expressed hesitancy last week about market preparedness, leading many to suspect that the date would be pushed to late November.

"To date, the Parties are technically ready to implement Stock Connect," says a spokesperson for HKEx. "However, at the date of this announcement, HKEx has not received the relevant approval for the launch of Stock Connect, and there is no firm date for its implementation. Further announcements will be made as and when there are any material developments on the timetable of launch."

Stock Connect, or the Through Train as it is known in industry parlance, is covered in depth for this month's issue of Waters magazine. The article can be found here.