China

Clearing Agents:

China Securities Depository and Clearing Corp (CSDCC) – Shanghai Branch: The CSDCC acts as a central depository, clearing house and registrar for equities including A and B-shares, funds, closed-end funds, exchange traded funds (ETFs), treasury bonds, financing bonds, convertible bonds, corporate bonds, bond repos, and warrants in the Shanghai market. All A and B shares are dematerialised at the CSDCC Shanghai branch and the use of the central depository is mandatory in mainland China.

Depositories
China Securities Depository and Clearing Corp (CSDCC) – Shanghai Branch: The CSDCC is a state-owned, non-profit entity that was established on March 30, 2001. The CSDCC is the result of a merger of the previous central depositories, the Shanghai Securities Central Clearing and Registration Corporation (SSCCRC), established in March 1993, and the Shenzhen Securities Central Clearing Co Ltd (SSCC), established in September 1995.

With effect from October 1, 2001, the legal title of the SSCCRC and the SSCC has been changed to the CSDCC Shanghai and CSDCC Shenzhen respectively as two branches of the CSDCC.

The CSDCC head office is based in Beijing. It reports to and is directly supervised by the CSRC headquarters. The former two securities clearing companies affiliated to the SHSE and SZSE have been integrated with the merged company being jointly funded by the SHSE and SZSE.

Under Chinese securities law, for both Shanghai and Shenzhen markets, the prime record of ownership of dematerialised securities is held by the CSDCC. CSDCC provides a daily transaction report and holdings report after settlement to the custodian as evidence of title for the beneficial owner holding shares in the depository. All shares are automatically registered under the name of the ultimate investor upon settlement by the CSDCC Shanghai branch’s computer systems.

Payment Systems
There are three types of bank-to-bank RMB fund transfers in China:

Cashiers orders
Cashiers orders are issued by local branches. Same day value is provided if presented before the cut off time of 15:00.

PBOC Clearing House for RMB local clearing
A credit advice is prepared by banks and collected by PBOC to effect fund transfers in their RMB clearing system. This paper-based payment mode is used to credit funds to another bank’s account holders. This system is only applicable to the banks within the same city.

PBOC collects the credit advice frombanks in two batches. For HSBC first collection is at 10:00 and the second collection is at 16:00.

For VD value, the credit advice must reach PBOC before 11:30 on VD.

PBOC real time payment system
The PBOC launched a real time payment system, China National Advance Payment System on April 14, 2003 for bank-to-bank transfer of the electronic fund transfer.

Overdraft Permitted
Overdrafts are allowed for HKD and USD (for B shares). There are no restrictions on overdraft facilities for USD/HKD offered to foreign investors, however, the terms and conditions of the facility are negotiated between the local custodian and the investor.

Overdrafts in RMB (A share market) are prohibited.