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Shanghai-London Stock Connect: Operating Mechanism, Opportunities, and Challenges

Research output: Contribution to journalArticle

  • Lerong Lu
  • Ningyao Ye
Original languageEnglish
Pages (from-to)684-687
Number of pages4
JournalButterworths Journal of International Banking and Financial Law
Volume34
Issue number10
Early online date1 Oct 2019
DateAccepted/In press - 11 Jul 2019
DateE-pub ahead of print - 1 Oct 2019
DatePublished (current) - 1 Oct 2019

Abstract

Shanghai-London Stock Connect (SLSC) is an innovative cross-border financial markets listing and trading mechanism linking Chinese stock market with its British counterpart. It allows Chinese public companies to issue Global Depository Receipts (GDR) to be traded on the London Stock Exchange. Similarly, UK-listed companies can issue Chinese Depository Receipts (CDR) to obtain a secondary listing on the Shanghai Stock Exchange. SLSC enables British and international investors to purchase the shares of some of the best companies in the world’s second largest economy. The market scale of GDR amounts to $2.9 trillion while the size of the CDR market is predicted to exceed $800 billion, which could generate substantial revenues for investment banks and city law firms. The threshold of issuing either GDR or CDR is relatively high as issuers have to have a minimum market capitalisation of RMB 20 billion (US$2.92 billion). More than 260 of the 1,500 Shanghai-listed companies will be potentially eligible to participate in the project. On 17 June 2019, Huatai Securities, one of China’s largest brokerages, has become the first Chinese public company to be dual-listed on the LSE via the latest SLSC. Huatai raised $1.7 billion from selling 82.5 million GDRs to international investors. HSBC is said to be the first UK company to apply for a CDR listing in Shanghai. SLSC has raised multiple technical and regulatory challenges in relation to time difference, information disclosure, investor protection, cross-border financial supervision, as well as cross-border dispute resolution.

    Research areas

  • China, Chinese economy, Shanghai-London Stock Connect, Financial Regulation, Financial Law, Stock Market, Capital markets, Securities Regulation, Initial Public Offering, IPO, Chinese Depositary Receipt, Global Depositary Receipt, Shanghai Stock Exchange, London Stock Exchange, Corporate Finance

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  • Full-text PDF (accepted author manuscript)

    Rights statement: This is the final published version of the article (version of record). It first appeared online via Westlaw at https://uk.westlaw.com/Document/I5C2520A0124211EA983FE512B7469AE4/View/FullText.html?navigationPath=Search%2Fv1%2Fresults%2Fnavigation%2Fi0ad6ad3b0000016eb7290631336c0a03%3FNav%3DRESEARCH_COMBINED_WLUK%26fragmentIdentifier%3DI5C2520A0124211EA983FE512B7469AE4%26parentRank%3D0%26startIndex%3D1%26contextData%3D%2528sc.Search%2529%26transitionType%3DSearchItem&listSource=Search&listPageSource=8c786bf0bde08bf61de67a4cf30ae162&list=RESEARCH_COMBINED_WLUK&rank=1&sessionScopeId=db0c744892d758e0c92a078b6beff6f6629507f4a27e49a54a3aab689d7ca219&originationContext=Search+Result&transitionType=SearchItem&contextData=%28sc.Search%29&comp=wluk. Please refer to any applicable terms of use of the publisher.

    Final published version, 1 MB, PDF document

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