London Stock Exchange Group PLC has revealed operational details of a pending mutual stock-market access between the U.K. and China, Bloomberg reported May 18, citing an LSE presentation seen by the news outlet.
The link, dubbed London-Shanghai Stock Connect, will allow Shanghai-listed Chinese companies with a market capitalization of at least 20 billion yuan to list on the London board via global depositary receipts. London-listed companies will be able to trade in Shanghai via similar securities, although the report did not spell out the requirements for U.K. companies to be traded on the Shanghai bourse.
The link, starting in late 2018, is part of China's ongoing efforts to open its financial market. The country launched its first mutual stock-market access program between Shanghai and Hong Kong in November 2014. The program was then expanded to between Shenzhen and Hong Kong in 2016. London will be the first venue outside China where investors could buy securities interchangeable with China-listed shares.
For the LSE, the move will help boost trading activity as U.S. sanctions will potentially cut activity with Russian companies, Bloomberg added.
Other details of the program include: trading hours of the Shanghai Board in London will be 9 a.m. to 4:30 p.m. U.K. time, and transactions will be in dollars, with the possibility of yuan and pounds. The trading in London will be subject to English norms, the report said.
On top of the stock-trading link, U.K. Chancellor Philip Hammond said in December 2017 that both sides agreed to commence feasibility studies for a U.K.-China bond connect and for mutual recognition of funds between the two jurisdictions.
As of May 18, US$1 was equivalent to 6.38 Chinese yuan.
