Hong Kong trading firms given green light to access the LSE directly

Hong Kong trading firms given green light to access the LSE directly

On 15 June 2015, the LSE Group announced that the Hong Kong Securities and Futures Commission (SFC) has given regulatory approval for Hong Kong firms to become members of the London Stock Exchange (LSE).

The move facilitates greater opportunities for investors in Europe’s capital markets by strengthening ties between the UK and the world’s second largest economy.

Before SFC’s authorisation, only companies from the European Economic Area and Israel were permitted to trade directly on the LSE. Hong Kong investors looking to buy shares in UK listed companies were required to trade through a UK intermediary.

The new deal now allows Hong Kong firms to connect directly to the LSE’s order book, and by doing so trade in cleared securities, derivatives and depositary receipts with some of the world’s largest and well-known companies.

Alexander Justham, CEO, London Stock Exchange plc said:

“This is a significant development in further deepening the ties between London, Hong Kong and China. As Members of London Stock Exchange, Hong Kong firms will be able to offer their customers access to the most liquid European market. Like Hong Kong, London has always been a market open to the world and we are excited about the increasingly strong relationship being forged between these two exceptional global financial centres.”

The move coincides with the LSE’s second annual Greater China Capital Markets conference where the British Consul General to Hong Kong and Macao highlighted the growth of the RMB market and the importance of London as an international RMB centre.

  • There are currently 57 mainland Chinese firms listed in London.
  • Since the start of 2014, 7 new Chinese companies were admitted to the Alternative Investment Market (AIM).
  • Chinese companies have raised over £2 billion on UK markets since 2004.

We anticipate that allowing Hong Kong firms membership of the LSE will continue to encourage Chinese investment in the London market. The benefits are expected to be four-fold: for the LSE itself; for Hong Kong firms who will have direct access to Europe’s most liquid market; for UK-China financial links; and for London as an RMB hub.

For more information please contact Richard Cobb, Partner on richard.cobb@michelmores.com or 01392 687500