Oct 10, 2017 07:00 PM

Hong Kong Trades on Stock Connects With Chinese Mainland to Need Investor ID

A new regulation that will require Hong Kong investors to use their real names in the Stock Connect programs will
A new regulation that will require Hong Kong investors to use their real names in the Stock Connect programs will "enhance market transparency and surveillance," the head of Hong Kong's Securities and Futures Commission said. Above, the floor of the Hong Kong Stock Exchange — slated to close later this month — is seen in February 2016. Photo: IC

Hong Kong will require investors to register with their real names in order to trade on the Shanghai and Shenzhen bourses through the Stock Connect programs starting in around mid-2018, the city’s top securities regulator said Tuesday.

The new registration system, which has been in the works for months, will bring the Hong Kong market’s regulatory framework more in line with mainland efforts to increase transparency.

Investors on the Chinese mainland must reveal their real names and identification numbers to brokerages before they can trade in securities — a policy aimed at curbing money laundering and other illegal activities. But investors in Hong Kong, who have access to mainland-listed stocks and bonds under the Shenzhen and Shanghai Stock Connects, are not currently required to do so.

Additionally, Hong Kong-based investors buying more than 5% of a company’s shares through a Stock Connect are not required to file a disclosure, contrary to the usual practice for similar transactions elsewhere.

Ashley Alder, the CEO of Hong Kong’s Securities and Futures Commission, said at the 2017 Thomson Reuters Pan Asian Regulatory Summit in the city on Tuesday that Hong Kong’s regulators will work with the China Securities Regulatory Commission to establish a system to share real-time information about transactions.

The new system will “enhance market transparency and surveillance and hence improve efficiency in cracking down on malpractice,” Alder said. Initially, the system will only apply to “northbound” trading — Hong Kong-based investors using the Stock Connects to trade in Shanghai and Shenzhen — but Alder said Hong Kong regulators hope mainland authorities will cooperate to share similar information on “southbound” trading — mainland investors trading in Hong Kong stocks.

Northbound trading made up about 6% of market turnover in the Chinese market this year, Alder said. Southbound trading accounted for 10% of the Hong Kong market’s total turnover this year.

Carlson Tong Ka-shing, chairman of the Securities and Futures Commission, said Monday that the implementation of real-name registration will not change Hong Kong’s listing rules so there is no need for a market consultation on the new system, according to the city English-language newspaper The Standard.

Contact reporter Teng Jing Xuan (

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