The China Securities Regulatory Commission and the Securities and Futures Commission of Hong Kong issued a joint announcement on the consensus to introduce the measure.
John Lee, chief executive of the HKSAR, said that in accordance with the national 14th Five-Year Plan, the HKSAR government has strived to deepen and widen the mutual access between the mainland and Hong Kong financial markets.
Following the expansion of the scope of eligible stocks under Stock Connect to include Exchange-traded Funds, stocks of foreign companies primary listed in Hong Kong, and more listed companies in Shanghai and Shenzhen over the last year, the measure signified another breakthrough of Stock Connect, enriching the existing trading channels and enhancing trading efficiency, he said.
Lee said the measure will further facilitate the mutual access and concerted development of the two capital markets, strengthening Hong Kong's position and function as an international financial center and global offshore renminbi business hub.
Paul Chan, financial secretary of the HKSAR government, said the introduction of the block trading arrangement is important in deepening the interaction and integration of the capital markets. It can enhance the certainty and transparency in the transaction price and timing for large-sized securities transactions, thereby allowing investors to manage their asset allocation more efficiently at lower costs and reducing the potential price impact of relevant transactions through auto-matching.
Chan said the measure will help meet the increasing demand of cross-border block trading from investors, and is conducive to further enhancing cross-border liquidity.
Wilfred Yiu, Hong Kong Exchanges and Clearing Limited (HKEX) co-chief operating officer and head of equities, said the launch of block trading is the latest significant enhancement to the Connect franchise, providing price and execution certainty for large-sized deals that will help further enhance trading efficiency.
This will support the continued growth and development of this exclusive mutual market access platform, offering more choice and more liquidity, he added.
According to the joint announcement, offshore investors will be able to conduct block trades on the Shanghai Stock Exchange and the Shenzhen Stock Exchange through the Northbound trading of Stock Connect, while mainland investors will be able to conduct manual trades on the Stock Exchange of Hong Kong Limited through the Southbound trading of Stock Connect under the initiative.
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