Shenzhen Stock Exchange (SZSE)

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Overview
Shenzhen Stock Exchange (SZSE)
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 SZSE began operations in April 1991 and is wholly state-owned. Similar to its counterpart in Shanghai, the exchange deals in both A and B shares. China Southern Glass launched the first B-share issue in March 1992. The SZSE offers tradable equities, including A and B shares, funds, closed-end funds, ETFs, warrants, treasury bonds, and financing and corporate bonds. All these instruments operate in a scripless environment. The B-share market is open to foreign investors and domestic individual investor while A shares, bonds, closed-end funds, ETFs and warrants are only open to domestic institutional/individual investor and Qualified Foreign Institutional Investors (QFIIs). 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 not currently any detailed time frame in which this will be completed.

Trading System
Trades are executed on the trading floor or off-floor via computer terminals linked to brokers.

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 authorized 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 authorized 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 computerized system matches trades based on best price, time and sequence. Shenzhen Stock Exchange securities are not inter-listed with the Shanghai Exchange.

Trading Hours

Monday to Friday:
09:15 - 09:25 (Opening call auction)
09:30 - 11:30 13:00 - 14:57 (Continuous trading)
14:57 - 15:00 (Closing call auction)

Security Identifiers
ISIN: Not officially recognized.

Other: The Shenzhen Stock Exchange uses local securities codes.

Instruments
Equities
A shares: Available to Qualified Foreign Institutional Investor (QFII) since December 2002.
Foreign institutional investors wishing to invest in China A shares and the Bonds market must apply for “qualified foreign institutional investor (QFII)” status. Every prospective QFII must apply to the China Securities Regulatory Commission (CSRC) for a Securities Investment Business License. After obtaining the Securities Investment License from the CSRC, the QFII must apply to the State Administration of Foreign Exchange (SAFE) for Investment Quota Approval and RMB account opening. After obtaining the two above-mentioned approvals, QFIIs can proceed to apply for an investor code (if any) to CSDCC Shanghai and Shenzhen respectively before investing in A shares.
B shares: available to foreign and individual domestic investors which are listed, traded and settled in HKD.
Debt: Exchange-traded corporate bonds, Treasury bonds, convertible bonds (available to QFIIs).*
Money Market: Not applicable to foreign investors.
Physical: Not applicable, all securities in mainland China market are dematerialized.
Other: Open-ended funds,close-ended funds, Exchange Traded Funds(ETFs), Listed Open-ended Funds (LOFs), warrants (available to Chinese Nationals and QFIIs).

Board Lots
Equities: 100 shares constitute a board lot. Odd lots can be sold through the same trading procedures as a normal trade, but cannot be purchased.
Debt: The trading lot size for bonds/bonds repo is RMB 100 par value for one unit. The minimum booking unit for purchasing bonds/bonds repo and selling bonds repo will be 10 units (RMB 1,000 par value), and for selling bonds the minimum booking unit will be one unit (RMB 100 par value).