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SPSA model catching on with Shanghai-Hong Kong Stock Connect investors
The new special segregated accounts service (SPSA), which allow users of the Shanghai-Hong Kong Stock Connect to comply with the pre-trade delivery requirement without transferring their shares to brokers before execution, appears to be catching on with a total of 56 SPSA accounts opened since the model was launched last month.
Bayani S Cruz 22 May 2015

The new special segregated accounts service (SPSA), which allows users of the Shanghai-Hong Kong Stock Connect to comply with the pre-trade delivery requirement without transferring their shares to brokers before execution, appears to be catching on with a total of 56 SPSA accounts opened since the model was launched last month.

 

According to data from the Hong Kong Exchanges and Clearing Ltd, a total of 56 SPSAs were opened by the participating banks on behalf of their clients since the SPSA was launched on April 20.

 

About 40 of these SPSA accounts were opened by Standard Chartered Bank (SCB) alone with the rest from other participating banks. There were over 100 trades settled for SPSA accounts during the same period.

 

In terms of volume, the Stock Connect's aggregate market turnover reached US$17.6 billion as of May 21, a monthly increase of 29% on a compound annual growth rate since the Stock Connect was launched on November 17.

 

This means about 45.5% of the total quota have been used based on this level of market turnover.

 

"Given the increased appeal of the SPSA model to international investors, we had always projected a volume increase following the launch of the new model. The quantum of this growth though exceeds our expectations slightly," says Barnaby Nelson, managing director and head of investors & intermediaries, transaction banking North East Asia and Greater China for SCB.

 

Trades for SPSA holders were executed through seven brokers on SCBs multi-broker platform and trades have been settled using both standard Settlement Instructions and using broker confirmations.

 

Clients opening SPSAs with SCB are mainly private banks, global long only funds and sovereign entities.

 

Last week, the China Securities Regulatory Commission provided additional clarifications on beneficial ownership recognition and highlighted a likely fourth quarter launch for the Shenzhen connect.

 

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