Hong Kong, mainland Chinese regulators agree to share identity of Stock Connect investors

International investors trading A-shares via the cross border Stock Connect scheme will have their identities passed on to the Securities and Futures Commission which will share the information with its mainland Chinese counterpart, according to SFC chief executive Ashley Alder, who unveiled the plan on Tuesday.

Likewise, the China Securities Regulatory Commission will provide the SFC with investor identification for mainlanders trading Hong Kong stocks via the Stock Connect, Alder said.

The new regulations will be implemented from the middle of next year.

At present, Hong Kong trading systems only show the brokers name and client identification is only provided to the SFC upon request. This is different from the mainland where each investor is identified so the CSRC knows who is behind the transactions.

Such regulatory differences create problems under the Stock Connect schemes which allow investors to engage in cross border trading. The first Connect, introduced in November 2014, linked the markets of Shanghai and Hong Kong while the link between Hong Kong and Shenzhen began operating in December last year.

The current system allows a mainland investor to set up an account with a Hong Kong broker to trade mainland shares via the Stock Connect, without the need to provide identification to the CSRC.