The U.K. Financial Conduct Authority and China Securities Regulatory Commission on Monday approved a cross-border investment program called Shanghai-London Stock Connect.
Under the new regulatory cooperation, investors and issuers in the U.K. and China will have a mutual access to both capital markets through depository receipts.
The joint initiative means that Shanghai-listed Chinese companies can apply to be admitted to trading on the Shanghai segment of London Stock Exchange's main market, while companies with a premium listing in the U.K. will be able to apply for admission to the main board of the Shanghai Stock Exchange.
Through the program, institutional investors can get exposure to China A shares via securities traded in the form of depository receipts.
The structure is new to China, the FCA said, and offers Chinese investors access to international securities in their own currency through a domestic exchange.
"This new scheme will deepen and strengthen connectivity between U.K. and China capital markets to the advantage of both countries," FCA CEO Andrew Bailey said. "We both believe in the positive contribution regulators can make in international capital markets, and the new co-operation we're announcing today will be an important contributor to the success of the scheme."
