China’s securities watchdog has published the first round of rules for the Shanghai-London Stock Connect, Caixin reports, as the three-year preparation enters its final stages.
The program, which hopes to be rolled out by the end of the year, will offer investors a reduced-friction gateway to securities listed in the other city, by means of trading China depositary receipts (CDRs).
The guidelines place a lower limit on the market cap of UK-firms participating in the scheme at Rmb 20 billion ($2.89 billion), based on their share’s average closing price over the last quarter. They will also be required to issue at least Rmb 500 million worth of CDRs in Shanghai.
Also stated was a $3 million minimum of equity holdings for institutional investors looking to trade on the Connect.
The project is gathering steam as China’s two mainland stock markets fight an intensifying rout. On Thursday the Shanghai Composite fell 5.2%, marking the worst single-day drop in two years. As a result, Beijing is stepping up efforts to make its markets more appealing to foreign capital.