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Hong Kong, China put proposed ETF connect scheme on hold

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Hong Kong, China put proposed ETF connect scheme on hold

Hong Kong will place on hold a cross-border trading program between the city and mainland China for exchange-traded funds, or ETFs, the South China Morning Post reported Dec. 13, citing Securities and Futures Commission Chairman Tim Lui Tim-leung.

Instead, Hong Kong and China will now prioritize launching cross listings of ETFs instead, following a mutual fund recognition agreement between the SFC and China Securities Regulatory Commission.

The decision stems from technical issues in building the infrastructure to set up an ETF connect framework because of the different trading and settlement methods for ETFs among Hong Kong, Shanghai and Shenzhen, Lui said. He noted that the ETF Connect scheme will remain a long-term agenda item for the SFC.

The scheme was previously anticipated to launch in the second half of 2019.

The ETF Connect scheme would have been the fourth trading program established between Hong Kong and mainland China. A stock connect was launched with Shanghai in 2014, one with Shenzhen in 2016 and a bond connect framework in 2017.