China is looking to widen the scope of a program that currently links the Shanghai and London stock exchanges to include bourses in Shenzhen, Switzerland and Germany, in an effort to further open up China’s capital markets to international investment, reports Caixin. Launched in 2019, the Shanghai-London Stock Connect scheme allows eligible companies listed either on the Shanghai or the London exchange to issue depositary receipts—which represent ownership of their shares—on the other bourse.
Under the program, eligible UK-listed firms are able to issue Chinese depositary receipts (CDRs) in Shanghai, while Shanghai-listed firms can likewise issue global depositary receipts (GDRs) in London. Investors can buy these depositary receipts to gain exposure to companies listed elsewhere.
On Friday, the China Securities Regulatory Commission (CSRC) published draft revisions to the regulations governing the Shanghai-London Stock Connect program, and sought input from the public on the draft updated rules renamed “Regulations of Depositary Receipts Under the Stock Connect Scheme Between Domestic and Overseas Stock Exchanges,” according to the statement. If finalized in its current form, the amended rules will allow eligible companies listed on the Shenzhen bourse to issue GDRs abroad, and include the Swiss and German markets, the CSRC said.