HKEx eyes October 27 for trading link launch: sources

[September 26, 2014]  By Michelle Price

HONG KONG (Reuters) - A landmark trading link between Hong Kong Exchanges & Clearing Ltd (HKEx) and the Shanghai Stock Exchange is expected to be launched on Oct 27, two people with direct knowledge of the matter told Reuters.

A broker and an asset manager said senior management at the HKEx, as well as the market participant relations department, had told them the exchange had tentatively scheduled the launch of the link for the last Monday in October.

Analysts have hailed the trading scheme as a milestone in the opening up of China's capital markets, as it allows foreign investors to trade in and out of Chinese stocks in real time.

It is expected to boost the average daily value of trading on the HKEx by around 38 percent to HK$93 billion ($12 billion) by 2015, according BNP estimates.

Asked about the launch date, a spokesman for the HKEx said it had yet to be finalised. Officials at the Shanghai Stock Exchange did not immediately respond to an emailed request for comment. The sources declined to be identified as the information is not public.

Hong Kong and Beijing agreed in April to launch the scheme, which will allow international investors to trade Shanghai 'A' shares via the Hong Kong stock exchange while mainland investors will be able to trade Hong Kong 'H' shares via the Shanghai Stock Exchange, subject to quotas both ways.

Analysts have speculated that the link could pave the way for inclusion of China A shares into the FTSE and MSCI indexes in the first quarter of 2015, and may in time encompass more products, such as commodities and fixed income.

The exchanges had initially said they expected the project to be launched within six months, or by October, but the precise start date has been shrouded in uncertainty due to the complexity of the project, which involves both exchanges, their clearing houses, brokers, independent technology providers, and several regulatory agencies in both Hong Kong and China.

Several brokers and asset managers had also raised concerns about critical issues relating to the treatment of foreigners' shares held in China and the tax status of the scheme.

The trading scheme was first floated in 2007 but was later shelved due to China's economic slowdown amid the global financial crisis.

(Reporting By Michelle Price; Editing by Denny Thomas and Miral Fahmy)

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