Industry flags Stock Connect trading risks
Pre-trade checks and stock transfer restrictions are cited as particular problems for long-only managers who will look to trade A-shares via the Hong Kong-Shanghai stocks link.
Long-only buy-side managers could face operational, credit and execution risks when trading A-shares from Hong Kong via the pending HK-Shanghai Stock Connect programme because it is being set up to fit China’s settlement cycle, fear industry participants.
In China, shares are settled on the trade date (T) and the cash for trades is settled on T+1, while in Hong Kong both are settled both on T+2.
To ensure Stock Connect users in Hong Kong do not sell shares they do not own, the e…
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