Inclusion of ETFs in Stock Connect
New Fee Waivers for Fixed Income and Money Market Exchange Traded Funds transactions
Product diversity is key to building Hong Kong into Asia’s ETF marketplace. To encourage trading in and drive liquidity to fixed income ETFs listed in Hong Kong, both the current trading tariff and the minimum stock settlement fee are now waived for fixed income and money market ETFs transactions.
The fee waivers are effective until further notice. Please see the list of eligible ETFs on the HKEX website or refer to Exchange Circulars ETP/001/21 and CD/CDCO/CCASS/013/2021 for more information.
Summary of fee waivers for fixed income and money market ETFs:
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Existing fee |
New fee arrangement |
| Trading tariff |
HK$0.5 per transaction1 |
Waived |
| Stock settlement fee |
For each exchange trade1
0.002% of gross value of each transaction, capped at HK$100 per trade and subject to a lower limit of HK$2 per trade
For each crossed exchange trade2
0.001% per side of gross value of each transaction, capped at HK$50 per side per trade and subject to a lower limit of HK$1 per side per trade
|
Lower limit waived |
1 Exchange Trade is defined in the Rules of the Exchange as a trade in a CCASS Eligible Security (other than a China Connect Security) either reported to the Exchange by an Exchange Participant or effected on the Exchange.
2 Crossed Exchange Trade is a trade where the buy and sell of an Exchange Trade is handled by the same Exchange Participant.
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Exchange Traded Product (ETP) issuers must be licensed by the Securities and Futures Commission (SFC) prior to issuance of any ETP in Hong Kong. Potential ETP issuers should contact the SFC for information about their eligibility as ETP issuers. |
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Leveraged and Inverse Product (L&I Product) issuers are required to fulfil additional eligibility requirements.
See more: SFC’s Supplemental Circular on Leveraged and Inverse Products
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ETP issuers and trustees will have to apply to Hong Kong Securities Clearing Company Limited (HKSCC) for the admission of the ETP units as eligible securities for deposit, clearing and settlement in CCASS before the ETP is listed. Potential ETP issuers and trustees are advised to contact HKEX’s Clearing Division as early as possible in parallel with the process of seeking SFC authorisation. |
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Service agent
- HK Conversion Agency Services Limited (HKCAS) can act as a service agent for most ETFs tracking non-Hong Kong equities and L&I Products. As a service agent, HKCAS facilitates the book-entry deposit / withdrawal of the ETP units into / from CCASS for the ETP units created / redeemed outside CCASS.
- The ETP issuer, as a manager, trustee (or custodian as the case maybe), registrar, Participating Dealers (PDs) and its agent (where applicable) and any other relevant parties are required to sign a service agreement with HKSCC and HKCAS.
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Conversion agent
- HKCAS can act as a conversion agent for most ETFs tracking Hong Kong equities. As a conversion agent, HKCAS facilitates the settlement of ETP unit creation and redemption instructions submitted by PDs via CCASS.
- A participation agreement (signed by the ETP issuer, trustee, PD, HKSCC, HKCAS and any other relevant parties) and a conversion agency agreement (signed by the ETP issuer, HKSCC and HKCAS) are required.
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After obtaining the SFC’s authorisation with conditions, a formal listing application of ETPs can be submitted to the Listing Division of HKEX. Listings of ETPs are regulated under Chapter 20 of the Listing Rules and the application form is available on HKEX website. |
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For fees charged by HKEX for listing of ETPs, please refer to Section 3 under Appendix 8 of the Listing Rules. |
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After obtaining the SFC’s authorisation with conditions, ETP issuers are advised to contact HKEX’s ETP team at ETFs@hkex.com.hk or LIProducts@hkex.com.hk in relation to market making arrangements. |
