Oversight: ETF Connect

On 27 May 2022, the China Securities Regulatory Commission (CSRC) and the Securities and Futures Commission of Hong Kong (SFC) issued a joint announcement (Announcement) in respect of an in-principle agreement between the CSRC and the SFC regarding the inclusion of eligible exchange-traded funds (ETFs) by Mainland Chinese and Hong Kong exchanges in the Mainland-Hong Kong Stock Connect arrangement (ETF Connect). On the same day Hong Kong Exchanges and Clearing Limited (HKEX) issued frequently asked questions (FAQs) on the inclusion of ETFs for northbound trading via the Mainland-Hong Kong Stock Connect (Stock Connect) and a regular review document regarding inclusion of ETFs in Stock Connect. On 28 June 2022, the CSRC and the SFC issued a further joint announcement (Further Announcement) to state that the trading of ETFs under ETF Connect will commence on 4 July 2022. The HKEX also issued on 28 June 2022 a circular regarding the launch of ETF Connect.

This Oversight first provides a brief overview of the background regarding ETF Connect. It then discusses the eligibility requirements and key features of ETF Connect as outlined in the Announcement and the FAQs. Finally it analyses the practical implications arising from the implementation of ETF Connect.