In this file photo dated July 31, 2021, statues are seen on the square of Hong Kong Exchanges and Clearing Limited (HKEX) in south China's Hong Kong. (PHOTO / XINHUA)

Officials said on Friday the introduction of block trading, or manual trades, under the Stock Connect is a breakthrough that will deepen the integration of capital markets in Hong Kong and the Chinese mainland.

The China Securities Regulatory Commission and the Securities and Futures Commission jointly announced the consensus to introduce block trading under the mutual market access program on Friday.

Financial Secretary Paul Chan Mo-po said the introduction of the block trading arrangement is important in deepening the interaction and integration of the capital markets

Under the initiative, offshore investors will be able to conduct block trades on the Shanghai Stock Exchange and the Shenzhen Stock Exchange through the Northbound trading of Stock Connect, while mainland investors will be able to conduct manual trades on the Stock Exchange of Hong Kong through the Southbound trading of Stock Connect.

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Chief Executive John Lee Ka-chiu said the measure signifies “another breakthrough” of Stock Connect, enriching the existing trading channels and enhancing trading efficiency.

It follows the expansion of the scope of eligible stocks under the Stock Connect to include exchange-traded funds, stocks of foreign companies with primary listings in Hong Kong, and more listed companies in Shanghai and Shenzhen over the last year.

“The measure will further facilitate the mutual access and concerted development of the two capital markets, strengthening Hong Kong’s position and function as an international financial center and global offshore renminbi business hub,” he said.

Financial Secretary Paul Chan Mo-po said the introduction of the block trading arrangement is important in deepening the interaction and integration of the capital markets.

“It can enhance the certainty and transparency in the transaction price and timing for large-sized securities transactions, thereby allowing investors to manage their asset allocation more efficiently at lower costs, while reducing the potential price impact of relevant transactions through auto-matching,” Chan said.

The measure will help meet the increasing demand of cross-border block trading from investors in the two places, and is conducive to further enhancing cross-border liquidity, the finance chief added.

Wilfred Yiu, Hong Kong Exchanges and Clearing’s co-chief operating officer and head of equities, said the launch of block trading is the latest significant enhancement to the Connect franchise, providing price and execution certainty for large-sized deals that will help further enhance trading efficiency.

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“This will support the continued growth and development of this exclusive mutual market access platform, offering more choice and more liquidity. We look forward to working closely with our partners to prepare for this rollout, as well as on other Connect-related enhancements, as we connect China and the world,” Yiu said.

The stock exchanges of the two places will study the relevant business, technical and regulatory arrangements and consult the market to develop an implementation proposal, according to the joint announcement.

A separate announcement will be made on the implementation details and the launch date.

Contact the writer at evanliu@chinadailyhk.com