The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney is part of the Euromoney Institutional Investor PLC
Northeast Asia

London Stock Connect may give China a bridge to New York

The link appears to be finally taking shape, but with the dollar as its biggest trading and settlement currency, the scheme looks increasingly skewed towards investors in the US.

By Noah Sin

About four years after the equity link was first floated as an idea, the London Stock Exchange (LSE) has laid out the ground rules for the connect. 

China and the UK will launch the first product as London Stock Connect before the end of this year, Fang Xinghai, vice-chairman of the China Securities Regulatory Commission, told a forum in Shanghai at the end of May. “We are taking the first step in connecting the largest emerging market in the world with the oldest mature international market,” he said.

The access programme will allow firms to list using depository receipts (DR). Only Shanghai-listed companies worth over Rmb20 billion ($3.12 billion) can list DRs in London. They also cannot issue more than 15% of their share capital on the so-called ‘Shanghai board’ at the LSE. So far, so normal. But what is notable is that the dollar is set to be the dominant currency for trading on the London-Shanghai link; renminbi and Sterling could be added at a later stage.

This is in stark contrast to the Hong Kong Stock Connect, where transactions were settled in offshore renminbi (CNH) before the introduction of dollar settlement too last November. 

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree