East Asia Securities Company Limited

Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect Service

Through Shanghai-Hong Kong Stock Connect, Hong Kong and overseas investors may trade selected Shanghai Stock Exchange (“SSE”) stocks ("SSE Northbound Trading") while eligible Mainland investors will be accepted to trade The Stock Exchange of Hong Kong Limited (“SEHK”) stocks through SSE. Meanwhile, through Shenzhen-Hong Kong Stock Connect, Hong Kong and overseas investors may trade selected Shenzhen Stock Exchange (“SZSE”) stocks ("SZSE Northbound Trading"), while eligible Mainland investors will be accepted to trade SEHK stocks through SZSE.

The Stock Connect services of East Asia Securities Company Limited ("EAS") allow customers to trade via SSE Northbound Trading and SZSE Northbound Trading (collectively, "Northbound Trading")

1. Eligible stocks

Hong Kong and overseas investors can only trade eligible stocks. The initial scope is as follows:-

Type	SSE Northbound Trading	SZSE Northbound Trading
Index constituent stocks	SSE 180 Index and SSE 380 Index	Constituent stocks of the SZSE Component Index and SZSE Small/Mid Cap Innovation Index which have a market capitalization of not less than RMB 6 billion
A+H shares	SSE-listed A-shares (not included as constituent stocks of the relevant indices) which have corresponding H shares listed on SEHK	SZSE-listed A-shares (not included as constituent stocks of the relevant indices) which have corresponding H shares listed on SEHK
Excluding	SSE-listed shares which are not traded in RMB or which are included in the "risk alert board" under the SSE Listing Rules.	SZSE-listed shares which are not traded in RMB or which are included in the "risk alert board" under the SZSE Listing Rules or under delisting arrangement.

At the initial stage of Shenzhen Connect, only institutional professional investors are eligible to trade shares that are listed on the ChiNext Board of SZSE under SZSE Northbound Trading. (Definition of "institutional professional investors" can be referred to website of Securities and Futures Commission)

The list of eligible stocks for Northbound Trading is available on HKEX’s website.

If a stock ceases to be an eligible stock for SSE Northbound Trading or SZSE Northbound Trading (as the case may be) but continues to be listed on SSE or SZSE (as the case may be), Hong Kong and overseas investors will only be allowed to sell the share but restricted from further buying the same.

2. Investment Quota

SSE Northbound Trading and SZSE Northbound Trading will be respectively subject to a separate set of daily quota ("Daily Quota"). There is no aggregate cross-boundary investment quota for Shanghai Connect and Shenzhen Connect.

Investors should note that the Daily Quota is calculated on a "net buy" basis. Under this principle, investors will always be allowed to sell their SSE securities and SZSE securities regardless of the quota balance.

Daily Quota for Northbound Trading

	Daily Quota for SSE Northbound Trading	Daily Quota for SZSE Northbound Trading
Purpose	It limits the maximum net buy value of SSE stocks each day.	It limits the maximum net buy value of SZSE stocks each day.
Quota	RMB 52 billion	RMB 52 billion
Operation	Daily Quota balance = Daily Quota – Buy orders + Sell trades + Adjustments SEHK will monitor the usage of the Daily Quota on a real time basis. Daily Quota will be refreshed and remain the same every day. Unused Daily Quota will not be carried over to next day’s Daily Quota. Once the Daily Quota balance drops to zero or the Daily Quota is exceeded during the opening call auction session, new buy orders will be rejected. If the Daily Quota balance resumes to a positive level before the end of the opening call session, SEHK will again accept buy orders. Once the Daily Quota balance drops to zero or the Daily Quota is exceeded during a continuous auction session (i.e. continuous trading), no further buy orders will be accepted for the remainder of the day. The same arrangement will apply to the closing call auction of SZSE. Investors can still continue to sell SSE securities and SZSE securities.

The Northbound Quota information is available on HKEX’s website at http://www.hkex.com.hk.

3. Settlement arrangement

Northbound trades will follow the settlement cycle of the A-share market, i.e. securities are settled on the trading day ("T day") while money is settled on T+1 day.

4. Trading hours

SSE Northbound Trading will follow SSE's trading hours while SZSE Northbound Trading will follow SZSE’s trading hours.

SSE/SZSE trading session	SSE trading hours	SZSE trading hours
Opening call auction	09:15 − 09:25	09:15 − 09:25
Continuous auction (morning)	09:30 − 11:30	09:30 − 11:30
Continuous auction (afternoon)	13:00 − 14:57	13:00 − 14:57
Closing call auction	14:57 − 15:00	14:57 − 15:00

09:20 - 09:25 and 14:57 - 15:00: SSE/SZSE will not accept any order cancellation.
09:10 - 09:15; 09:25-09:30; 12:55-13:00: Orders and order cancellations can be accepted by SEHK but will not be processed by SSE and SZSE until their markets open.
Orders that are not executed during the opening call auction session will automatically enter the continuous auction session. Orders that are not executed during the continuous auction session will automatically enter the closing call auction session.

5. Trading days

Initially, Hong Kong and overseas investors will only be allowed to trade on SSE and SZSE on days where the Hong Kong and Mainland markets are both open for trading, and banking services are available in both markets on the corresponding money settlement days. The following table illustrates the trading arrangement of Northbound Trading:

	Mainland	Hong Kong	Northbound Trading	Remarks
Day 1	Business day	Business day	Available	-
Day 2	Business day	Business day	Not available	Hong Kong market closes on the corresponding money settlement day.
Day 3	Business day	Holiday	Not available	Hong Kong market closes.
Day 4	Holiday	Business day	Not available	Mainland market closes.

Please refer to the HKEX’s website for the details of the Northbound Trading calendar.

Subject to the above, if a trading day is a half trading day in Hong Kong market, Northbound Trading will continue until the respective Mainland market closes.

6. Trading arrangement

The following table summarizes the trading arrangements under Northbound Trading:-

Stock code	6 digits
Trading board lot size	100 shares per lot (for buy orders)
Tick size	RMB 0.01
Order type	Only limit orders will be accepted throughout the day. Please note that SSE and SZSE limit orders can be matched at the specified price or a better price.
Price limit	SSE Northbound Trading: ±10% (and ±5% for stocks under special treatment (i.e. ST and ST stocks) in the risk alert board) based on previous closing price All orders input for SSE securities must be at or within the price limit. Any orders with price beyond the price limit will be rejected by SSE. The upper and lower price limit will remain the same intra-day. SZSE Northbound Trading: ±10% (and ±5% for stocks under special treatment (i.e. ST and ST stocks) in the risk alert board) based on previous closing price Stocks traded on ChiNext Market: ±10% based on previous closing price All orders input for SZSE securities must be at or within the price limit. Any orders with price beyond the price limit will be rejected by SZSE. The upper and lower price limit will remain the same intra-day.
Maximum order size	1 million shares
Trading and settlement currency	RMB Investors should ensure that they have sufficient RMB to settle SSE securities and SZSE securities trades.
Day (turnaround) trading	Day trading is not allowed. Hence, investors buying SSE securities and SZSE securities on T day can only sell the securities on and after T+1 day.
Odd lot trading	Only available for sell orders. Board lot buy/sell order and odd lot sell order are both matched on the same platform on SSE, and subject to the same share price. Similarly, board lot buy/sell order and odd lot sell order are both matched on the same platform on SZSE, and subject to the same share price. Therefore, the matched quantity of a board lot buy/sell order may eventually include odd lot.
Order amendment	Not available. Investor who wishes to amend an order needs to cancel the outstanding order and input a new one, subject to the quota balance.
Block trades	Not available
Over-the-counter or manual trades	Not available
Short selling	Investors are prohibited from naked short selling for Northbound Trading. Covered short selling is allowed subject to the requirements set by SSE and SZSE respectively. For the avoidance of doubt, EAS does not offer any short selling service under Northbound Trading.
Margin trading in SSE securities and SZSE securities	Participation in the Margin Trading and Securities Lending Programme (融資融券) provided by SSE and SZSE is not allowed, but margin trading in SSE securities and SZSE securities may be conducted in limited circumstances. For the avoidance of doubt, EAS does not offer any margin trading service under Northbound Trading.
Stock borrowing and lending	Allowed in limited circumstances, but EAS currently does not offer such service.
Subscription of new stock issues	Initially, Hong Kong and overseas investors can participate in rights issue / open offer subscription of SSE-listed issuers and SZSE-listed issuers but NOT initial public offering of SSE securities and SZSE securities.
Physical deposits and withdrawals	Not available
Trading fees	Handling fee, securities management fee, transfer fee, portfolio fee, certain Central Clearing and Settlement System ("CCASS") fees, stamp duty and tax on cash dividends and/or bonus shares (For details, please refer to the related information published on HKEX’s China Stock Markets Web.) At present, Hong Kong and overseas investors are exempted from paying the Mainland capital gains tax and business tax when trading SSE securities via Shanghai Connect. The availability for similar exemption for trading SZSE securities via Shenzhen Connect is subject to confirmation by the relevant PRC regulators or authorities.
Issuing of corporate announcements	Through SSE website or SZSE website (as the case may be), four officially appointed newspapers (namely, Shanghai Securities News, Securities Times, China Securities Journal and Securities Daily), and http://www.cninfo.com.cn. Investors are reminded that issuers listed on the SZSE ChiNext Market are required to publish certain corporate announcements on their corporate websites and the officially appointed websites only. Investors can also visit HKEX website’s China Stock Markets Web for the company announcements of SSE securities and SZSE securities issued on the previous T day.
Language of corporate announcements	Simplified Chinese
Order cancellation and rejection	Investors should note that:- (i) their order may be cancelled in case of contingency; (ii)their order cancellation request may not be processed in case of contingency and in such event they shall bear the settlement obligations; and (iii) their order may be rejected upon request of SSE, SZSE or SEHK.

7. Severe weather conditions

Initially, the trading arrangement under severe weather conditions for Northbound Trading will be as follows:-

Scenario	Northbound Trading
SSE or SZSE is suspended due to bad weather.	SSE Northbound Trading or SZSE Northbound Trading (as the case may be) would not open.
T8 or above / Black rainstorm warning issued before HK market opens (i.e. 9:00 a.m.) and cancelled after 12:00 noon	Not open
T8 or above issued after HK market opens but before SSE market or SZSE market opens (i.e. 9:00 a.m. – 9:15 a.m.)	Not open
T8 or above issued after SSE market or SZSE market opens (i.e. 9:15 a.m.)	Trading will continue for 15 minutes after issuance of T8 or above, thereafter, only order cancellation is allowed till SSE market or SZSE market (as the case may be) closes.
Black rainstorm warning issued after HK market opens (i.e. 9:00 a.m.)	Trading continues as normal
T8 / Black rainstorm cancelled at or before 12:00 noon	Trading resumes after 2 hours
T8 / Black rainstorm cancelled after 12:00 noon	Not open

8. Pre-trade checking

According to Mainland regulations, before an investor sells any share, there should be sufficient shares in the account at the end of the previous day, otherwise SSE or SZSE (as the case may be) will reject the sell order concerned. Therefore, investors should ensure that they have sufficient shares in their accounts prior to placing sell orders.

9. Dynamic price checking

Dynamic price checking for buy orders would be in place to prevent mischievous behavior towards the use of the Northbound Trading quota. Buy orders with input prices lower than the current best bid (or last traded price in the absence of current best bid, or previous closing price in the absence of both current best bid and last traded price) beyond a prescribed percentage will be rejected by China Stock Connect System. The percentage has been set at 3% during the initial phase and it may be adjusted from time to time subject to market conditions.

10. Nominee services and corporate action

Hong Kong and overseas investors are holding SSE securities traded via Shanghai Connect and SZSE securities traded via Shenzhen Connect through their brokers or custodians while HKSCC, being the nominee holder of such SSE securities and SZSE securities, is providing the brokers and custodians nominee services such as collection and distribution of cash dividends, distribution of shareholders’ meeting notices, consolidation and submission of voting instructions. Accordingly, Hong Kong and overseas investors are to exercise their shareholder rights in relation to the SSE securities and SZSE securities through HKSCC in accordance with the CCASS Rules and CCASS Operational Procedures. However, it should be noted that, under the CCASS Rules, HKSCC as nominee holder shall have no obligation to take any legal action or court proceeding to enforce any rights on behalf of the investors in respect of the SSE securities and SZSE securities in Mainland or elsewhere.

Where the articles of association of a listed company do not prohibit the appointment of proxy/multiple proxies by its shareholder, HKSCC will make arrangements to appoint investor(s) as its proxies or representatives to attend shareholders’ meetings when instructed.