STOCK BORROWING AND LENDING: HONG KONG

STOCK BORROWING AND LENDING: HONG KONG

Stock borrowing and lending for Hong Kong Securities is regulated by several bodies such as the Hong Kong Securities Clearing Company (HKSCC) and the Securities and Futures Ordinance (SFO). There are several rules and procedures that need to be followed by borrowers and lenders as they participate. More details can be found below.

Stock Borrowing and Lending within Hong Kong Securities

  • The Hong Kong Exchanges and Clearing Limited (HKEX) owns the Hong Kong Securities Clearing Company (HKSCC). The HKEX’s mission is to “operate a world-class marketplace for Hong Kong and Mainland China securities and derivatives products.” It offers access to a fair, secure, efficient, orderly, and transparent marketplace for issuers, investors, and intermediaries. The HKSCC provides “securities clearing and settlement, money settlement, depository and common nominee services.”
  • The HKSCC has issued compulsory stock borrowing and lending regulations and all transactions need to be performed in accordance with these regulations. It operates the Central Clearing and Settlement System (CCASS) and the depository for all eligible securities that are listed on the Hong Kong Stock Exchange (SEHK).
  • A participant in the exchange is permitted to lend or borrow securities only according to the CASS rules or regulations as published by the SEHK.
  • Where the borrowing of securities relates to Hong Kong Stock, it also needs to be done according to the applicable law and particularly, the Stamp Duty Ordinance and practice notes.
  • A stock lending and borrowing agreement needs to be filled and this is defined in the Securities and Futures Ordinance (SFO) as the “agreement whereby a person borrows or lends securities pursuant to an arrangement where the borrower undertakes to return securities of the same description to the lender or pay the equivalent value of the securities.” This includes stock borrowing within the Stamp Duty Ordinance of Hong Kong. The SFC is a body that regulates the securities and futures markets in Hong Kong.

Borrowers/Sellers

Lenders

Report for Stock Borrowing and Lending (“SBL”) for China Connect Securities (Shanghai-Hong Kong Stock Connect)

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