HSBC facilitates market-first short selling transactions under the QFII/RQFII scheme in mainland China

HSBC successfully facilitated short selling transactions by an offshore investor via the Qualified Foreign Institutional Investors (QFII) scheme. This marks the first time that offshore investors can participate in margin financing and short selling (MF&SS) transactions on the Shanghai and Shenzhen stock exchanges.

The transactions took place on 29 December, and mark the third market-first HSBC has enabled as custodian under new QFII rules that took effect on 1 November. Other market-firsts HSBC facilitated were the first securities lending transactions and the first onshore private fund investment by offshore investors in mainland China via the QFII scheme.

Stephen Pemberton, Global Head of Product, Banks & Broker Dealers, Securities Services at HSBC, said: “Since the rollout of new QFII rules, we have worked with our clients, and market participants, to prepare for the opportunities they will generate. We designed a robust, streamlined MF&SS solution for clients, enabling them to consume normalised securities transaction data, and allowing us once again to deliver market-first services. “MF&SS is an important securities trading mechanism, helping to activate trading and drive market price discovery. Since the inception of MF&SS in the China A-share market it has evolved to support further scale and growth. The opening of MF&SS business through QFII/RQFII enables offshore investors to diversify their trading strategies, further boosting inbound investment flows to the China securities market.

“With continued investment in new technology, HSBC is committed to rolling out innovative and valuable products, providing best-in-class client service, and playing an active role in the continued opening up of China’s capital markets.”

HSBC is the leading custody services provider to QFII and Renminbi Qualified Foreign Institutional Investors (RQFII) in China, covering 15 markets. HSBC has actively participated in the reforms and upgrades of the schemes since their launch in 2003. HSBC also ranks top in terms of the number of overseas institutional investors it is serving, and the assets under custody of overseas institutional investors in the China Interbank Bond Market among all settlement agent banks.

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