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Chinese regulator urges Hong Kong to implement investor identification scheme

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Chinese regulator urges Hong Kong to implement investor identification scheme

A senior Chinese securities regulator urged Hong Kong to introduce a scheme to identify investors in the city when they trade in Chinese stocks.

At a June 1 forum held by Hong Kong Exchanges & Clearing Ltd., China Securities Regulatory Commission Vice Chairman Jiang Yang said he hopes Hong Kong will accelerate a push to implement "see-through" supervision to regulate investors that engage in northbound trading, referring to Hong Kong investors that trade in China's stock markets through the Shanghai-Hong Kong and Shenzhen-Hong Kong stock connects.

China has been promoting see-through supervision in its domestic stock markets to allow market regulators to obtain individual investors' identification information as a way to prevent market speculation and manipulation.

"We will also actively support and cooperate with Hong Kong on see-through supervision of southbound investors," Jiang added, referring to China-based investors that trade Hong Kong stocks through the two stock connect programs.

Jiang said HKEX and other regulators in Hong Kong need to strengthen regulatory cooperation with China in order to promote steady and healthy development in the capital markets.

"In recent years, with increasing interactive activity between China's and Hong Kong's capital markets, securities trading at the two markets has significantly altered investors' trading behavior on both sides," Jiang said. He added that China and Hong Kong will continue to deepen cooperation on law enforcement, supervision, information sharing and personnel exchange.

Working with Hong Kong's Securities and Futures Commission, HKEX plans to roll out an Investor ID regime for northbound traders in the third quarter. Under the regime, brokers in Hong Kong that manage stock connect accounts for investors will assign identification information to clients for both Hong Kong and Chinese regulators to conduct timely market surveillance.