Shanghai Stock Exchange (SSE)

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Overview
Shanghai Stock Exchange (SHSE)
Currently, there are two exchanges in mainland China: the Shanghai Stock Exchange (SHSE) and the Shenzhen Stock Exchange (SZSE). The two exchanges are not cross-linked and the stocks listed at the two exchanges are mutually exclusive. The SHSE was inaugurated in November 1990 and is wholly state-owned. It began operations in December 1990. In 1991, the Municipal Government in Shanghai introduced regulations that allowed listed companies in Shanghai to issue B-shares to attract foreign investments. The first B-share issue was launched by Shanghai Vacuum in February 1992.

At present, the SHSE has tradeable equities, including A and B-shares, funds, close-ended funds, exchange traded funds (ETFs), treasury bonds, corporate bonds, bond repos, and warrants. All these instruments are operated in a scripless environment. The B-share market is open to foreign investors and domestic individual investors while A shares, funds, close-ended funds, exchange traded funds (ETFs), treasury bonds, corporate bonds, bond repos, and warrants are open to domestic institutional/individual investors and qualified foreign institutional investors (QFIIs).

Note: due to technical issues, trading in bond repurchase agreements and corporate bonds will be temporarily delayed for QFIIs. The CSRC is currently working with the two stock exchanges to resolve the technical issues and hopes to make these instruments available to QFIIs in the near future.

The China Securities Regulatory Commission (CSRC) is considering a merger of the SHSE and SZSE. The proposal will involve moving the shares currently listed on the SZSE to the SHSE, and establishing a second board in Shenzhen. However, there is currently no clear time table for this to occur.

QFIIs can participate in Primary Market (through initial public offerings) as well as Secondary Market trading. Each QFII must appoint a domestic securities company to execute trades on their behalf. Only one domestic securities company per market (Shanghai and Shenzhen) per QFII may appoint.

Trading System
All trading orders are processed through a computerized automatic matching system operated by the stock exchanges, which effects each transaction based on the principle of price and time priority. Trading information is transmitted electronically from stock exchange’s computer terminal to the member broker’s trading terminal

For B share transactions, a foreign investor located in the People’s Republic of China (PRC) may place buy or sell orders directly with an authorised domestic broker. If the foreign investor is based outside the PRC, they need to place the buy/sell orders with a foreign broker who holds a special seat in the exchange, or through an approved foreign broker who will relay the order to the authorised domestic broker for execution.

For A share transactions, a QFII may place buy or sell orders directly with a domestic broker. For each transaction, the broker will issue a sale or purchase confirmation to the investor. A computerised system matches trades based on best price, time and sequence. Shenzhen Stock Exchange securities are not interlisted with the Shanghai Exchange

Trading Hours

Monday to Friday:
Morning session
9:15 - 9:25 call auction
9:30 - 11:30 continuous auction

Afternoon session
13:00 - 15:00 continuous auction

Intent orders for block trades are accepted
9:30 - 11:30
13:00 - 15:30

Execution orders for block trades are accepted
15:00 - 15:30

Special block trade business, which is undertaken on an ad hoc basis, is accepted between 15:00 and 17:00, and participants, who are SSE qualified investors, may carry out spot trading in SSE trading room by way of auction, price inquiry, quotation, or another trading method, with delivery being non-guaranteed.

Security Identifiers
ISIN: Not officially recognised.

Other: TheShanghai Stock Exchange uses local securities codes.

Instruments
Equities
A shares: Available to Chinese nationals and Qualified Foreign Institutional Investors (QFIIs) since December 2002.

B shares: Available to foreign investors and domestic individual investors. “B” shares are listed, traded and settled in USD.

Debt: Exchange-traded corporate bonds, treasury bonds, convertible bonds available to QFIIs and Chinese nationals.
Note: due to technical issues, trading in bond repurchase agreements and corporate bonds will be temporarily delayed for QFIIs. The CSRC is currently working with the two stock exchanges to resolve the technical issues and hopes to make these instruments available to QFIIs in the near future.

Money Market: Not available to foreign investors.

Physical: N/A, all securities in the mainland China market are dematerialised.

Other: Open-ended funds, close-ended funds, Exchange Traded Funds(ETFs), Listed Open-ended Funds (LOFs), warrants - available to Chinese nationals and QFIIs.