China’s regulators to introduce block trading on Stock Connect

The Asia Securities Industry & Financial Markets Association (ASIFMA) welcomed the joint announcement by the China Securities Regulatory Commission (CSRC) and the Securities and Futures Commission (SFC) that both regulators have agreed to introduce block trading via the Stock Connect Channel. Currently, foreign investors can engage in block trading only through the QFI Channel.

Block trading is an alternative trading mechanism that allows the trading of a large amount of liquidity at an agreed upon price between participants and greatly reduces impact cost and signaling. According to the joint announcement, offshore investors will be able to conduct block trades on the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) through the Northbound trading of Stock Connect via the Stock Exchange of Hong Kong (HKEX), while Mainland investors will be able to conduct manual trades on the HKEX through the Southbound trading of Stock Connect under this initiative.

Lyndon Chao, managing director and head of Equities and Post Trade at ASIFMA, said in a statement: “The industry is excited to see strong regulatory support for this critical market reform, which addresses a long term need of strategic global investors, and looks forward to working with the exchanges on both sides of the border for a successful implementation.”

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