HKEX and Chinese stock exchanges reach agreement to include WVR companies

A joint working group will be established to achieve this goal.

The Stock Exchange of Hong Kong said that it has reached a consensus with the Shanghai and Shenzhen stock exchanges to work towards the inclusion of companies with weighted voting rights (WVR) for Southbound trading under the Stock Connect. 

“The three exchanges have agreed to set up a joint working group to formulate the specific programmes and supplementary rules for the inclusion of WVR companies in Stock Connect trading as soon as possible,” HKEX said in a statement, although no specific details on the timing was revealed.

The move comes after the Chinese exchanges made the surprise announcement barring WVR companies from the stock connect amidst reports claiming that investors didn’t have the full understanding of the new products days after Xiaomi, the first WVR firm, made its debut. 

Also read: Xiaomi's dismal debut flags trouble for Hong Kong's blockbuster IPO year

The market operator said in a statement that there is a need to consider the “maturity and regulatory practices” of the involved markets after acknowledging that investors are “not yet familiar with WVR companies.”

HKEX added that an initial Special Stability Trading Period (SSTP) will be required for Hong Kong-listed WVR companies following which WVR shares will be included in SOuthbound trading under the Stock Connect.