On November 15th, the Shanghai Stock Exchange announced that Morgan Stanley International Co., Ltd. will be registered as an overseas cross-border conversion institution for interconnected global depositary receipts.
It is worth noting that on October 12th of this year, Morgan Stanley International Co., Ltd. obtained the registration from the Shenzhen Stock Exchange to carry out cross-border conversion business on the Swiss Stock Exchange.
In recent years, with the continuous deepening of the two-way opening of the capital market, GDR (Global Depository Receipts) has become an important channel for overseas financing of Chinese listed companies. The overseas cross-border conversion institutions registered on the Shanghai and Shenzhen exchanges are also continuously expanding. As of now, there are 13 and 8 overseas cross-border conversion institutions for global depositary receipts registered on the Shanghai Stock Exchange and Shenzhen Stock Exchange, covering overseas markets including the London Stock Exchange, Swiss Stock Exchange, and Frankfurt Stock Exchange.
Da Mo has obtained the registration of overseas cross-border conversion institutions on the Shanghai Stock Exchange
According to the announcement on the official website of the Shanghai Stock Exchange on November 15th, in accordance with the relevant provisions of the "Interim Measures for the Listing and Trading of Interconnected Depositary Receipts between the Shanghai Stock Exchange and Overseas Stock Exchanges" and the "Guidelines for Interconnected Depositary Receipts Business of the Shanghai Stock Exchange No. 1- Cross border Conversion of Depositary Receipts", the Shanghai Stock Exchange has issued a notice to Morgan Stanley&Co International Plc) shall be registered as an overseas cross-border conversion institution for interconnected global depositary receipts.
However, the market scope of Morgan Stanley International's cross-border conversion business remains to be announced.
It is worth mentioning that previously, Morgan Stanley International Co., Ltd. obtained the registration from the Shenzhen Stock Exchange on October 12 to carry out cross-border conversion business on the Swiss Stock Exchange.
Chinese journalists from securities firms have noticed that in recent years, GDR has become an important channel for Chinese companies to raise funds overseas. As of now, 51 companies have completed their overseas listing and filing, and 21 companies have issued Global Depositary Receipts (GDRs) in Europe.
Depositary receipts are securities issued by depositors on the domestic market based on overseas securities, representing the equity of overseas underlying securities. The interconnection and exchange of depositary receipts business includes two businesses: Chinese depositary receipts and global depositary receipts. China Depositary Receipt (CDR) business refers to the listing of Chinese Depositary Receipts (CDRs) on the A-share main board by qualified overseas stock exchange listed companies. Global Depositary Receipt (GDR) business refers to the issuance of Global Depositary Receipts (GDRs) by eligible A-share listed companies on overseas stock exchanges. Depositary receipts and underlying stocks can be converted to each other, thus achieving interconnectivity between the two markets.
A non bank analyst at a securities firm told a Chinese journalist that the continuous issuance of GDR in recent years has helped improve the professional service capabilities of securities firms and brought them rich business opportunities; On the other hand, the deep customer resources and rich financial service experience of foreign financial institutions overseas are also beneficial for international investors to better participate in the Chinese capital market.
Overseas cross-border conversion institutions are steadily expanding
It is reported that in order to further facilitate cross-border investment and financing, promote the global allocation of factor resources, and promote the institutional opening of the capital market, in February 2022, the China Securities Regulatory Commission officially issued the "Regulations on the Supervision of Interoperability of Depositary Receipts in Domestic and Foreign Securities Markets", optimizing the Shanghai Luntong Depositary Receipt Mechanism, and incorporating Germany and Switzerland into the scope of application of Interoperability of Depositary Receipts in domestic and foreign stock exchanges.
The reporter noticed that as of now, there are 13 and 8 overseas cross-border conversion institutions registered on the Shanghai Stock Exchange and Shenzhen Stock Exchange, covering overseas markets including the London Stock Exchange, Swiss Stock Exchange, and Frankfurt Stock Exchange.
Among them, 13 companies on the Shanghai Stock Exchange are Barclays Bank, Goldman Sachs International, Industrial and Commercial Bank of China Standard Bank Public Limited, Everbright Sun Hung Kai (UK) Limited, Haitong International UK Limited, Huatai Financial Holdings (Hong Kong) Limited, HSBC Bank Limited (UK), Macquarie Bank Limited London Branch, JPMorgan Securities Limited, Swiss Bank China International Finance (UK) Limited, CITIC Lyon Securities UK, Morgan Stanley International Limited.
The 8 companies on the Shenzhen Stock Exchange are China International Finance (UK) Limited, Huatai Financial Holdings (Hong Kong) Limited, Haitong International (UK) Limited, CITIC Lyon Securities UK, Swiss Bank, Goldman Sachs International, JPMorgan Chase Securities Limited, and Morgan Stanley International Limited.
The institutional opening of China's capital market continues to deepen
In recent years, the institutional openness of China's capital market has continued to deepen, and high-level officials have repeatedly expressed encouragement for foreign investment to actively participate in the Chinese capital market.
The Central Financial Work Conference proposed to focus on promoting high-level financial openness and ensuring national financial and economic security. Steadily expanding institutional openness in the financial sector, improving cross-border investment and financing facilitation, and attracting more foreign financial institutions and long-term capital to come to China for business development.
On November 7th, the International Financial Leaders' Investment Summit kicked off in Hong Kong. Wang Jianjun, Vice Chairman of the China Securities Regulatory Commission, said at the meeting, "The Chinese capital market will definitely become more and more open in the future, just like the overall situation of our country's reform and opening up
The Central Financial Work Conference clearly stated that we will steadily expand institutional openness in the financial sector, enhance cross-border investment and financing facilitation, and attract more foreign financial institutions and long-term capital to come to China for business development. We will definitely implement the central government's decision-making and deployment. Wang Jianjun stated that the next step will be to continue to strengthen connectivity with overseas markets, and implement new overseas listing rules, Attract more overseas institutions to expand their business in the mainland capital market, and the China Securities Regulatory Commission will actively participate in international governance of the capital market, continuously deepening the institutional opening of the capital market.
Wang Jianjun introduced that the China Securities Regulatory Commission actively supports high-quality overseas entities to invest in domestic securities fund management institutions in accordance with the law, encourages foreign securities fund management institutions to leverage their professional and distinctive advantages, and actively participates in the Chinese capital market.
In terms of cross-border investment and financing, Wang Jianjun specifically mentioned that the China Securities Regulatory Commission has expanded the existing "Shanghai Luntong" mechanism in both directions, expanding it to the Shenzhen Stock Exchange domestically and to Germany, Switzerland, and other countries overseas. Currently, over 20 companies have issued GDRs overseas through this new mechanism. The China Securities Regulatory Commission implemented new regulations on overseas listing supervision in March, making the process of mainland enterprises listing overseas more transparent and the results more predictable. At the same time, it also relaxed the admission conditions for qualified foreign investors and expanded the scope of investment; Allowing foreign institutional investors who have been approved to enter the Chinese interbank market to directly invest in the bond market of the Shanghai and Shenzhen Stock Exchanges; Continuously improving the Shanghai Shenzhen Hong Kong Stock Connect mechanism, expanding the scope of trading targets, optimizing trading calendar arrangements, and steadily improving the convenience of foreign investment in A-shares.
On November 15th, Fang Xinghai, Vice Chairman of the China Securities Regulatory Commission, stated at the 2023 Shanghai Stock Exchange International Investor Conference that in recent years, the China Securities Regulatory Commission has steadfastly promoted the all-round opening of the market, institutions, and products, and has achieved a series of progress and results.
Fang Xinghai also mentioned that foreign investment is an important force for the high-quality development of China's capital market. Looking ahead, the further stable development of China's capital market and the reform and opening up will continue to inject strong vitality into the high-quality development of the Chinese economy.
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