HKSCC provides the SPSA services to the market to facilitate investors who maintain China Connect Securities with custodians but want to sell their China Connect Securities without having to pre-deliver the securities from their custodians to their executing brokers. Under the SPSA arrangement, an investor can request a Custodian Participant or a GCP who is not an Exchange Participant(non-EP GCP) to open a SPSA in CCASS to maintain its holdings in China Connect Securities in such SPSA. Each SPSA will be assigned a unique investor identification number (“Investor ID”) by CCASS. The investor may designate at most 20 EPs as executing brokers which are authorised to use its Investor ID to execute orders in China Connect Securities on its behalf.
CCASS will take a snapshot of the China Connect Securities holdings under each SPSA and replicate such holdings to China Stock Connect System (CSC) to perform pre-trade checking. When the designated EP inputs such investor’s sell order, it shall also input the Investor ID with the sell order. Prior to sending the sell order to the relevant China Connect Market for execution, CSC will verify whether the EP is a designated broker for the investor and whether the investor has sufficient holding in its SPSA. If the sell order passes the checking, it will be accepted; otherwise it will be rejected. Under this model, an investor will only need to transfer the relevant China Connect Securities from its SPSA to its designated broker’s account after execution and not before placing the sell order.