The Securities and Futures Commission (SFC) and the China Securities Regulatory Commission (CSRC) announced the approval, in principle, of the structure of Shenzhen-Hong Kong Stock Connect, which will provide mutual stock market access between Hong Kong and Shenzhen via a northbound trading link and a southbound trading link.

There will be no aggregate quota under Shenzhen-Hong Kong Stock Connect, according to the regulators. Today's joint announcement issued by the SFC and the CSRC also abolished the aggregate quota under Shanghai-Hong Kong Stock Connect with immediate effect.

"The expansion of mutual stock market access represents yet another milestone toward strengthening the interconnectivity between the stock markets in Hong Kong and the mainland as well as consolidating Hong Kong's position as a major offshore Renminbi center," said Carlson Tong, the SFC's chairman.

Following the announcement, Hong Kong Exchanges and Clearing Limited (HKEX) said it will work with the Shenzhen Stock Exchange (SZSE), the Shanghai Stock Exchange (SSE), the China Securities Depository and Clearing Corporation Limited (ChinaClear) and other relevant parties to establish mutual stock market access between Shenzhen and Hong Kong (Shenzhen-Hong Kong Stock Connect) and abolish the aggregate quota under Shanghai-Hong Kong Stock Connect.

The key features of Shenzhen-Hong Kong Stock Connect, including the shares eligible to be traded under the scheme, eligible investors and daily quotas, are set out in the joint announcement. HKEX expects it should take approximately four months from today to complete the preparations for the launch of the Shenzhen-Hong Kong Stock Connect.

"We look forward to launching Shenzhen-Hong Kong Stock Connect, which will be an extension of our successful mutual market access program with Shanghai, so investors in our market and the mainland market will have an additional secure, reliable channel for investment in the other market in an environment that they're familiar with," said HKEX Chief Executive Charles Li.

The launch of Shenzhen-Hong Kong Stock Connect is subject to the finalization of all necessary regulatory approvals, market readiness and relevant operational arrangements, according to SFC and CSRC.

(Xinhua News Agency August 16, 2016)