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Measures of Shenzhen Stock Exchange

for the Implementation of Shenzhen-Hong Kong Stock Connect Program

(Exposure Draft)

Chapter I General Provisions

Article 1 These Measures are formulated in accordance with the Several Provisions

on the Mutual Stock Market Access Mechanism between the Mainland and Hong

Kong (hereinafter, Provisions) issued by the China Securities Regulatory Commission

(hereinafter, CSRC), the Trading Rules of Shenzhen Stock Exchange (hereinafter,

Trading Rules), the Membership Management Rules of Shenzhen Stock Exchange

(hereinafter, Membership Rules) and other relevant rules of Shenzhen Stock

Exchange (hereinafter, Exchange or SZSE) for the purpose of regulating the

implementation of the Shenzhen-Hong Kong Stock Connect Program, preventing risk

and protecting the legitimate rights and interests of investors.

Article 2 Investors, the Exchange members, the securities trading service company

(hereinafter, SEHK Securities Trading Service Company) established by the Stock

Exchange of Hong Kong (hereinafter, SEHK), the securities trading service company

established by the Exchange (hereinafter, SZSE Securities Trading Service Company)

and other market participants shall comply with these Measures when they participate

in the Shenzhen-Hong Kong Stock Connect Program and other relevant activities.

Matters not prescribed in these Measures concerning the Shenzhen Connect trading

under the Shenzhen-Hong Kong Stock Connect (excluding investors’ instruction for

securities trading), the instruction for Hong Kong Connect trading under the

Shenzhen-Hong Kong Stock Connect, and the client management of the Exchange

members shall be governed by the Trading Rules, the Membership Rules and other

relevant rules of the Exchange.

Article 3 The Exchange exercises self-regulation of trading and other relevant

activities carried out under the Shenzhen-Hong Kong Stock Connect Program.

Chapter II Shenzhen Connect Trading

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Section 1 Participation of SEHK Securities Trading Service Company in

Shenzhen Connect Trading

Article 4 In order to participate in Shenzhen Connect trading, SEHK Securities

Trading Service Company shall apply to become an Exchange trading participant and

obtain a marketing unit, and shall comply with the Exchange’s relevant regulations on

the trading participants.

SEHK Securities Trading Service Company is not a member of the Exchange and thus

is not entitled to the Exchange members’ rights under laws, administrative regulations,

government department rules, regulatory documents, the Constitution of Shenzhen

Stock Exchange and Membership Management Rules.

Article 5 SEHK Securities Trading Service Company that applies to become an

Exchange trading participant shall submit the following documents:

(1) The Application Form and Letter of Undertaking;

(2) The approval documents issued by the CSRC and the Hong Kong Securities and

Futures Commission (hereinafter, SFC);

(3) Its Business License for Enterprise as a Legal Person;

(4) Its articles of association;

(5) Its management system and technical arrangement for Shenzhen Connect, and its

arrangement of appointing SEHK to take relevant responsibilities in respect of

Shenzhen Connect;

(6) The personal information on its directors, supervisors and senior officers;

(7) The Letter of Undertaking, technical standards and other requirements for SEHK

participants to participate in Shenzhen Connect;

(8) The settlement agreement between SEHK Securities Trading Service Company

and Hong Kong Securities Clearing Company Limited (hereinafter, HKSCC) on

Shenzhen Connect;

(9) The list of SEHK participants who intend to participate in Shenzhen Connect, and

a statement that such participants satisfy the technical standards and other

requirements;

(10) The fee collection method and fee structure for Shenzhen Connect; and

(11) Other documents as required by the Exchange.

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Article 6 SEHK Securities Trading Service Company shall route to the Exchange the

investors’ orders placed with SEHK participants for Shenzhen Connect trading and

bear the relevant trading responsibilities accordingly.

After the orders for Shenzhen Connect trading are executed on the Exchange, SEHK

Securities Trading Service Company shall acknowledge the trading results, accept the

trading report and send the same to relevant SEHK participants and HKSCC.

SEHK Securities Trading Service Company shall manage the trading activities of

SEHK participants in respect of Shenzhen Connect, and take necessary measures as

required by the Exchange against irregular trading activities under Shenzhen Connect.

Article 7 SEHK Securities Trading Service Company may appoint the SEHK to

perform the relevant duties prescribed in these Measures on its behalf, but shall still

be liable for insufficient or inappropriate performance of such duties.

Article 8 SEHK Securities Trading Service Company shall develop risk control

measures for Shenzhen Connect to enhance internal controls and prevent business

risks.

Article 9 SEHK Securities Trading Service Company shall establish the technical

standards and other requirements for SEHK participants to participate in Shenzhen

Connect, and test and assess the technical systems of the SEHK participants who

intend to participate in Shenzhen Connect.

Article 10 SEHK Securities Trading Service Company shall require the eligible

SEHK participants to sign the Letter of Undertaking on Shenzhen Connect. The Letter

of Undertaking shall include but not be limited to: complying with applicable laws,

administrative regulations, government department rules, regulatory documents and

operational rules of the Mainland China and Hong Kong; acknowledging and

implementing the relevant requirements imposed by SEHK Securities Trading Service

Company on the SEHK participants based upon the above provisions and the

agreements between the two parties, and requiring their clients to acknowledge and

implement relevant requirements through contracts or other arrangements;

acknowledging and requiring their clients to acknowledge through contracts or other

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arrangements the relevant regulations on the exemption of the Exchange from liability

as prescribed in these Measures and other rules of the Exchange.

Article 11 SEHK Securities Trading Service Company shall provide necessary

convenience and guidance for Shenzhen Connect investors and SEHK participants to

learn applicable laws, administrative regulations, government department rules,

regulatory documents, operational rules, business processes, and fee structures and

collection methods.

Article 12 SEHK Securities Trading Service Company shall comply with the

applicable laws, administrative regulations, government department rules, regulatory

documents and operational rules of the Mainland.

SEHK Securities Trading Service Company shall, in an appropriate manner, procure

that SEHK participants comply with the applicable laws, administrative regulations,

government department rules, regulatory documents of the Mainland and the

operational rules of the Exchange, and shall require SEHK participants to procure that

their clients shall so comply. It shall require SEHK participants to sufficiently disclose

to their clients the risks involved in Shenzhen Connect trading and the risks of

liability for violating the aforesaid laws, regulations or rules.

Article 13 When there is any change in the materials submitted by SEHK Securities

Trading Service Company to the Exchange under Article 5 of these Measures, SEHK

Securities Trading Service company shall submit the updated materials to the

Exchange within 3 Shenzhen Connect trading days after such change takes place.

SEHK Securities Trading Service Company shall provide reports on the operation of

Shenzhen Connect pursuant to the requirements of the Exchange.

Article 14 Where a material event occurs on the part of SEHK Securities Trading

Service Company and affects or may affect its business operation, it shall

immediately report to the Exchange stating the causes, current situation, possible

consequences and its response measures.

Article 15 SEHK Securities Trading Service Company shall properly keep the

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documents and materials produced as a result of the performance of its responsibilities

under these Measures, and shall, in an appropriate manner, require SEHK participants

to properly keep their clients’ materials and the clients’ instruction and order records

under Shenzhen Connect. Such documents and materials shall be kept for a minimum

period of 20 years.

Section 2 Eligible Shares for Shenzhen Connect

Article 16 The eligible shares for Shenzhen Connect include:

(1) The constituents of SZSE Component Index and SZSE Small/Mid Cap Innovation

Index with an average daily market capitalization of at least RMB 6 billion in the

6 months prior to the deadline for periodic review of the relevant index; or, if the

constituent stock has been listed within the 6 months prior to the periodic review

of the relevant index, its average daily market capitalization in the period since it

was listed shall be no less than RMB 6 billion; and

(2) SZSE-listed A shares of A+H companies that are dual-listed on the Exchange

and the SEHK Main Board.

Shares listed in the previous paragraph will not be included in Shenzhen Connect if

they are:

(1) Issued a risk alert by the Exchange (i.e., ST and *ST shares);

(2) Suspended from listing by the Exchange;

(3) In the pre-delisting period;

(4) Quoted and traded in foreign currencies (i.e. B Share); or

(5) In other special situation as recognized by the Exchange.

With the approved of the regulatory authority, the Exchange may adjust the scope of

eligible shares for Shenzhen Connect.

Article 17 Shares listed on the Exchange but not included in Shenzhen Connect that

fall within the first paragraph of Article 16 but outside the second paragraph of Article

16 of these Measures as a result of the adjustment of constituent stocks of relevant

indices shall be included in Shenzhen Connect.

With respect to a company listed on the SEHK Main Board (as H shares) that seeks

listing on the Exchange (as A shares), or of a company listed on the Exchange (as A

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shares) that seeks listing on the SEHK Main Board (as H shares), or a company that

seeks listing both on the Exchange (as A shares) and the SEHK Main Board (as H

shares) on the same trading day, its A shares may be included in Shenzhen Connect

after the A shares have been listed for 10 trading days and the company’s H shares

have passed the price stabilization period.

Article 18 Shenzhen Connect shares that fall outside the first paragraph of Article 16

or within the second paragraph of Article 16 of these Measures as a result of the

adjustment of constituent stocks of relevant indices shall be excluded from Shenzhen

Connect.

Article 19 The criterion of average daily market capitalization for A shares under (1)

of the first paragraph of Article 16 hereof is only applied at the time of periodic

adjustment of constituent stocks of relevant indices, with relevant shares included

under or excluded from Shenzhen Connect on the date of periodic adjustment.

The constituent stocks that meet the market capitalization threshold shall be

determined by the Exchange.

Article 20 SEHK Securities Trading Service Company shall publish the list of eligible

shares for Shenzhen Connect on the websites it designates. The inclusion or exclusion

of the shares shall take effect at the time published by SEHK Securities Trading

Service Company.

Section 3 Trading-specific Matters

Article 21 Shenzhen Connect shares are quoted and traded in RMB.

Article 22 The trading calendar and trading hours of Shenzhen Connect shall be

published by SEHK Securities Trading Service Company on the website it designates.

Article 23 Shenzhen Connect shares are traded on an auction basis, unless otherwise

prescribed by the Exchange.

Article 24 Orders for Shenzhen Connect shares shall be limit orders, unless otherwise

prescribed by the Exchange.

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The limit orders for Shenzhen Connect shares shall include such information as the

securities account number, the broker code, the securities code, buy or sell, quantity

and price.

The Exchange may require SEHK Securities Trading Service Company to provide

investors’ information in relation to their orders for regulatory purposes.

Article 25 The shares excluded from Shenzhen Connect under Article 18 of these

Measures but still listed on the Exchange may be sold, but not be purchased, through

Shenzhen Connect.

Article 26 The eligible shares for margin trading and covered short selling under

Shenzhen Connect shall be among the eligible securities for margin trading and short

selling on the Exchange.

Article 27 SEHK Securities Trading Service Company shall specifically flag short

selling orders covered by Shenzhen Connect shares.

The order price of covered short selling shall not be lower than the last execution

price of the same stock; in the absence of any executed trade on the given trading day,

the order price shall not be lower than the previous closing price.

SEHK Securities Trading Service Company shall procure that SEHK participants

require that the order price at which its clients sell the shares borrowed for covered

short selling shall meet the requirements in the previous paragraph if they sell such

shares before returning the same, except for the portion of the shares that exceed the

unreturned amount of borrowed shares.

Article 28 The covered short selling ratio of a single Shenzhen Connect share during

a single Shenzhen Connect trading day shall not exceed 1%; the cumulative covered

short selling ratio of a single Shenzhen Connect share over 10 consecutive Shenzhen

Connect trading days shall not exceed 5%. SEHK Securities Trading Service

Company shall perform pre-trade control based on the aforesaid percentage limits.

At the end of each Shenzhen Connect trading day, SEHK Securities Trading Service

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Company shall disclose the covered short selling ratios of Shenzhen Connect shares

on the websites it designates.

The Exchange may adjust the percentage limits set in the first paragraph of this

Article or suspend the acceptance of covered short selling orders for Shenzhen

Connect shares in line with market conditions.

Article 29 Where the Exchange suspends margin trading of a single Shenzhen

Connect share due to the reason that the monitoring indicator for margin trading of

this share reaches the specified level, the Exchange may require SEHK Securities

Trading Service Company to suspend routing orders for margin trading of this share.

Where the Exchange resumes margin trading of this share due to the reason that the

monitoring indicator for margin trading of this single share falls to the specified level,

the Exchange may inform SEHK Securities Trading Service Company to resume

routing orders for margin trading of this share.

Where the Exchange suspends short selling of a single Shenzhen Connect share due to

the reason that the balance of this share to be lent for short selling reaches the

specified level, the Exchange may require SEHK Securities Trading Service Company

to suspend routing orders for covered short selling of this share. Where the Exchange

resumes short selling of this share due to the reason that the balance of this share to be

lent for short selling falls to the specified level, the Exchange may inform SEHK

Securities Trading Service Company to resume routing orders for covered short

selling of this share.

Article 30 Non-trading transfer of Shenzhen Connect shares is not allowed except:

(1) The lending of Shenzhen Connect shares for covered short selling with a term of

less than one month;

(2) The one-day, non-renewable lending of Shenzhen Connect shares for pre-check

purposes within the scope of securities held by oneself;

(3) The transfer of Shenzhen Connect shares between an SEHK participant and its

clients to correct an erroneous trade;

(4) The allocation of Shenzhen Connect shares purchased by a fund manager

through the omnibus account to different fund accounts under its management;

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and

(5) Other circumstances prescribed by the Exchange and China Securities

Depository and Clearing Corporation Limited (hereinafter, CSDC).

Article 31 SEHK Securities Trading Service Company shall, in a proper manner,

require SEHK participants to ensure that there are sufficient securities available in

their clients’ accounts when accepting the clients’ sell orders, and not to accept any

sell order from those who do not have sufficient securities available in their accounts.

Article 32 The shares purchased under Shenzhen Connect shall not be sold before

settlement.

Article 33 SEHK Securities Trading Service Company and SEHK participants shall

not match by themselves the investors’ buy and sell orders for Shenzhen Connect

shares, and shall not, in any other forms, provide transfer services for Shenzhen

Connect shares at any venue other than the Exchange, save as otherwise prescribed by

the CSRC.

Article 34 The public information disclosed in respect of any securities trade

executed under Shenzhen Connect through SEHK Securities Trading Service

Company shall be labeled as “Only for Shenzhen Connect”.

Article 35 Without the permission of the Exchange, SEHK Securities Trading Service

Company shall not disclose the transaction information licensed by the Exchange to

itself to any entity or individual other than the SEHK participants and the clients of

SEHK participants for use, dissemination or for the development of indices or other

products.

SEHK Securities Trading Service Company shall, in an appropriate manner, require

SEHK participants to comply with the provisions in the previous paragraph and

procure that their clients shall so comply.

Article 36 SEHK Securities Trading Service Company shall pay handling fees and

other relevant fees for Shenzhen Connect trading as per the fee structure of the

Exchange.

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SEHK Securities Trading Service Company shall enter into an agreement with

HKSCC instructing HKSCC to conduct clearing and settlement and pay handling fees

and other relevant fees in respect of Shenzhen Connect trading on its behalf.

Article 37 Unless otherwise prescribed by the Exchange, the SZSE-listed shares that

are not included in Shenzhen Connect and are obtained as a result of equity

distribution or conversion of Shenzhen Connect shares, or acquisition of listed

companies under Shenzhen Connect may be sold, but not be purchased, through

Shenzhen Connect.

The non-SZSE-listed shares obtained as a result of equity distribution or conversion

of Shenzhen Connect shares, or acquisition of listed companies under Shenzhen

Connect are not allowed to be sold or purchased through Shenzhen Connect.

Article 38 The Exchange may adjust the trading methods, order types, order contents

and forms, business scope and trading limits, etc., for Shenzhen Connect in line with

market conditions.

Section 4 Quota Control

Article 39 SEHK Securities Trading Service Company shall monitor the usage of the

Shenzhen Connect daily quota on a real time basis and shall publish the same on the

designated website.

Article 40 The Shenzhen Connect daily quota balance shall be calculated as follows:

Daily Quota Balance = Daily Quota－Buy Orders + Sell Trades + Buy Orders

cancelled or Buy Orders rejected by the Exchange + Difference between the execution

prices and bid prices of Buy Orders.

Article 41 Once the Shenzhen Connect daily quota is used up during the opening

auction session, SEHK Securities Trading Service Company will not accept further

buy orders for the remainder of the session, but still accept sell orders. Once, before

the continuous auction session begins, the Shenzhen Connect daily quota balance

becomes positive due to cancellation of buy orders, rejection by the Exchange of buy

orders, or execution of sell orders, SEHK Securities Trading Service Company will

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resume accepting subsequent Shenzhen Connect buy orders.

Once the Shenzhen Connect daily quota is used up during the continuous auction

session, SEHK Securities Trading Service Company will not accept further buy orders

for the remainder of the session, but still accept sell orders. In such case, SEHK

Securities Trading Service Company will not resume accepting buy orders for the

remainder of the day, unless otherwise prescribed by the Exchange.

Article 42 The SEHK shall, in a proper manner, require SEHK participants not to,

and procure that they require their clients not to, use quota maliciously to affect quota

control by placing large buy orders at low prices when participating in Shenzhen

Connect trading.

Section 5 Shareholding Limits

Article 43 Investors participating in Shenzhen Connect shall observe the shareholding

limits prescribed in the Provisions.

Article 44 SEHK Securities Trading Service Company shall, in a proper manner,

require SEHK participants to reject investors’ orders, liquidate their positions or take

any other preventive and corrective measures if the investors breach shareholding

limits when trading Shenzhen Connect shares.

Article 45 When an investor fulfills information disclosure obligations under relevant

regulations, the shares of the same company listed at home and abroad and held by the

investor through Shenzhen Connect and other channels shall be aggregated.

Article 46 If, at the end of each trading day, the shares held by a single overseas

investor in the same listed company through Shenzhen Connect and other channels

exceed in the aggregate the specified limit, the investor shall liquidate the excess

shares within 5 Shenzhen Connect trading days and fulfill information disclosure

obligations in a timely manner pursuant to relevant regulations.

Article 47 If, at the end of each trading day, the shares held by all overseas investors

in the same listed company through Shenzhen Connect and through other channels

exceed in the aggregate the specified limit, the Exchange will, on a last-in-first-out

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basis, give notice to SEHK Securities Trading Service Company and other overseas

investors for liquidation of positions. SEHK Securities Trading Service Company

shall notify SEHK participants in a timely manner and require them to notify their

investors. Investors shall liquidate the excess shares within 5 Shenzhen Connect

trading days of receiving such notices.

Once the aggregate shareholding falls below the limit within 5 Shenzhen Connect

trading days as a result of other overseas investors’ voluntary reduction of holding,

SEHK Securities Trading Service Company may, on its own initiative or at the request

made to it through SEHK participants by Shenzhen Connect investors who have been

notified to reduce their shareholding, apply to the Exchange for allowing the original

shareholders to maintain their shareholding.

Article 48 In case that investors in the Shenzhen Connect fail to dispose of excess

shares pursuant to relevant regulations, SEHK Securities Trading Service Company

shall require relevant SEHK participants to liquidate such positions.

Chapter III Hong Kong Connect Trading

Section 1 Exchange Members’ Participation in Hong Kong Connect

Article 49 In order to participate in Hong Kong Connect, the Exchange members

shall meet the technical standards and other requirements prescribed by SZSE

Securities Trading Service Company.

Article 50 The Exchange members participating in Hong Kong Connect shall sign the

Hong Kong Connect service contract with SZSE Securities Trading Service Company

and define therein their respective rights and responsibilities.

Article 51 The Exchange rules governing its members’ management of clients’

trading activities are applicable to the Exchange members participating in Hong Kong

Connect.

Article 52 The Exchange members shall fully disclose to their clients the risks

involved in investment through Hong Kong Connect, procure that their clients comply

with applicable laws, administrative regulations, government department rules,

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regulatory documents and operational rules of the Mainland and Hong Kong, and be

subject to the supervision of the Exchange.

Article 53 The Exchange members may terminate the Hong Kong Connect service

contract with SZSE Securities Trading Service Company in accordance with relevant

agreements, provided however that they have made proper arrangements for their

clients.

Article 54 SZSE Securities Trading Service Company may agree with the Exchange

members that SZSE Securities Trading Service Company is entitled to suspend Hong

Kong Stock Connect service or terminate the Hong Kong Stock Connect service

contract if:

(1) The Exchange member breaches applicable laws, administrative regulations,

government department rules, regulatory documents or operational rules.

(2) The Exchange member fails to cooperate with the Exchange in the latter’s

inspections, investigations, or other regulatory actions regarding Hong Kong

Connect trading;

(3) The Exchange member is unable to provide Hong Kong Stock Connect trading

service for its clients due to major failures that occur in its relevant business or

technical systems; or

(4) Other circumstances prescribed in the agreement occur.

Article 55 SZSE Securities Trading Service Company may appoint the Exchange to

perform the relevant duties prescribed in these Measures on its behalf, but shall still

be liable for insufficient or inappropriate performance of such duties.

Section 2 Hong Kong Connect Shares

Article 56 The eligible shares for Hong Kong Connect include:

(1) The constituents of Hang Seng Composite LargeCap Index;

(2) The constituents of Hang Seng Composite MidCap Index;

(3) The constituents of Hang Seng Composite SmallCap Index with an average

month-end market capitalization of at least HKD 5 billion in the 12 months prior

to the deadline for periodic review of the index; or, if the constituent stock has

been listed within the 12 months prior to the periodic review of the relevant index,

its market capitalization at the time of listing shall be no less than HKD 5 billion;

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and

(4) SEHK Main Board-listed H shares of A+H companies that are dual-listed in the

Mainland and Hong Kong.

Shares listed in the previous paragraph shall not be included in Hong Kong Connect if

they are:

(1) H shares of A+H companies whose A shares are listed on the Exchange and have

been issued a risk alert by the Exchange, suspended from listing by the Exchange,

or have entered the pre-delisting period;

(2) H shares of A+H companies whose A shares are traded on the Risk Alert Board of

Shanghai Stock Exchange (hereinafter, SSE);

(3) SEHK-listed shares which are quoted and traded in currencies other than HKD; or

(4) Other shares recognized as special situations by the Exchange.

With the approved of the regulatory authority, the Exchange may adjust the scope of

eligible shares for Hong Kong Connect.

Article 57 Shares not included in Hong Kong Connect that fall within the first

paragraph of Article 56 but outside the second paragraph of Article 56 of these

Measures as a result of the adjustment of constituent stocks of relevant indices shall

be included in Hong Kong Connect.

With respect to a company listed on the Exchange or the SSE (as A shares) that seeks

listing on the SEHK Main Board (as H shares), or of a company listed on the SEHK

Main Board (as H shares) that seeks listing on the Exchange or the SSE (as A shares),

or a company that seeks listing both in the Mainland (as A shares) and Hong Kong (as

H shares) on the same trading day, its H shares may be included in Hong Kong

Connect after the company’s H shares have passed the price stabilization period and

its A shares have been listed for 10 trading days.

Article 58 Hong Kong Connect shares that fall outside the first paragraph of Article

56 or within the second paragraph of Article 56 of these Measures as a result of the

adjustment of constituent stocks of relevant indices shall be excluded from Hong

Kong Connect.

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Article 59 The criterion of market capitalization for Hong Kong shares under (3) of

the first paragraph of Article 56 hereof is only applied at the time of periodic review

of constituent stocks of Hang Seng Composite MidCap Index. The relevant shares are

included under or excluded from Hong Kong Connect on the date of periodic review.

The constituent stocks that meet the market capitalization threshold shall be

determined by the SEHK.

Article 60 SZSE Securities Trading Service Company shall publish the list of eligible

shares for Hong Kong Connect on the websites it designates, and the inclusion or

exclusion of the shares shall take effect at the time published by SZSE Securities

Trading Service Company.

Section 3 Trading-specific Matters

Article 61 Investors shall participate in the Hong Kong Connect trading through

RMB common stock accounts maintained with the Exchange.

Article 62 Hong Kong Connect shares are quoted in HKD and settled in RMB.

Article 63 The trading calendar and trading hours of Hong Kong Connect shares shall

be published by SZSE Securities Trading Service Company on the website it

designates. Trading hours on each Hong Kong Connect trading day include

pre-opening session, continuous trading session and closing auction session, subject to

SEHK’s regulation.

Upon the occurrence of any special circumstance as recognized by SZSE Securities

Trading Service Company that leads to or may lead to suspension of Hong Kong

Connect trading, SZSE Securities Trading Service Company may adjust the trading

calendar and trading hours of Hong Kong Connect, and make an announcement

accordingly.

Article 64 Hong Kong Connect trading is conducted through SEHK’s Automatic

Order Matching System, but odd lots held by investors can only be sold through

SEHK’s Semi-Automatic Order Matching and Execution System.

When trading through SEHK’s Automatic Order Matching System, investors shall

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place at-auction limit orders during SEHK’s pre-opening session and closing auction

session and enhanced limit orders during SEHK’s continuous auction session.

Article 65 Orders for Hong Kong Connect shares shall be placed in one trading unit

or the integral multiples thereof, except for selling odd lots.

Article 66 Shares excluded from Hong Kong Connect pursuant to Article 58 of these

Measures but still listed on the SEHK may be sold, but not to be purchased, through

Hong Kong Connect.

Article 67 Hong Kong Connect shares purchased by investors may be sold before

settlement on the same trading day once the execution is confirmed.

Article 68 The regulations governing the third-party depository of clients’ settlement

funds for trading A shares shall be applied mutatis mutandis to Hong Kong Connect

trading.

Article 69 The Exchange members shall ensure that their clients have sufficient RMB

funds or securities available in their accounts before accepting clients’ Hong Kong

Connect orders. They are prohibited from accepting any buy or sell order from those

who do not have sufficient securities available in their accounts.

Article 70 SZSE Securities Trading Service Company and the Exchange members

shall not match by themselves investors’ buy and sell orders for Hong Kong Connect

shares, and shall not, in any other forms, provide transfer services for Hong Kong

Connect shares at any venue other than the SEHK, save as otherwise prescribed by

the CSRC.

Article 71 Once the orders for Hong Kong Connect shares are placed, their prices or

sizes shall not be changed. However, during the order cancellation period permitted

by the SEHK, orders that are not executed may be cancelled.

Article 72 The Exchange members participating in Hong Kong Connect shall submit

orders to the SEHK through SZSE Securities Trading Service Company.

After receiving trading results and other records from the SEHK, SZSE Securities

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Trading Service Company will send the same to the Exchange members, who will, in

turn, send the same to their clients.

Article 73 Real-time quotations of Hong Kong Connect shares will be released by the

SEHK.

Without the permission of the SEHK, any Exchange member or other entity

recognized by the Exchange shall not disclose the transaction information licensed by

the SEHK to itself to any entity or individual other than their clients for use,

dissemination or for the development of indices or other products.

Article 74 The Exchange members shall properly keep instruction and order

placement records and other materials pursuant to relevant regulations.

Article 75 Investors participating in Hong Kong Connect trading shall pay

commissions to their appointed Exchange members pursuant to relevant regulations

and pay the trading fee, trading system usage fee and other fees as per the SEHK’s fee

standards.

Article 76 Unless otherwise prescribed by the Exchange, the SEHK-listed securities

that are not included in Hong Kong Connect and are obtained as a result of equity

distribution or conversion of Hong Kong Connect shares, or acquisition of listed

companies under Hong Kong Connect may be sold, but not be purchased, through

Hong Kong Connect.

SEHK-listed call warrants of SEHK-listed shares that are obtained as a result of rights

issue by Hong Kong Connect share issuers, or equity distribution or conversion of

Hong Kong Connect shares may be sold, but not be purchased, through Hong Kong

Connect. The exercise of such call warrants is governed by the relevant regulations of

the CSRC and the CSDC.

The non-SEHK-listed securities that are obtained as a result of equity distribution or

conversion of Hong Kong Connect shares, or acquisition of listed companies under

Hong Kong Connect are not allowed to be sold or purchased through Hong Kong

Connect.

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Article 77 The Exchange may adjust the trading methods, order types, business scope,

trading limits, etc. for Hong Kong Connect in line with market conditions.

Section 4 Quota Control

Article 78 SZSE Securities Trading Service Company shall monitor the usage of the

Hong Kong Connect daily quota on a real time basis and shall publish the same on the

designated website..

Article 79 The Hong Kong Connect daily quota balance is calculated as follows:

Daily Quota Balance = Daily Quota－Buy Orders + Sell Trades + Buy Orders

cancelled or Buy Orders rejected by the SEHK + Difference between the execution

prices and bid prices of buy orders.

The values of buy orders, sell trades, buy orders cancelled or buy orders rejected by

the SEHK, and the difference between the execution prices and bid prices of buy

orders as mentioned in the previous paragraph shall be converted from HKD to RMB

at the reference exchange rate provided by the CSDC before trading starts on each

trading day and be calculated in RMB.

Article 80 Once the Hong Kong Connect daily quota balance is used up during the

pre-opening session, SZSE Securities Trading Service Company will not accept

further buy orders till the end of such session, but still accept sell orders. Once the

Hong Kong Connect daily quota balance becomes positive due to cancellation of buy

orders, rejection by the Exchange of buy orders, or execution of sell orders, SZSE

Securities Trading Service Company will resume accepting subsequent Hong Kong

Connect buy orders when the SEHK continuous auction session starts.

Once the Hong Kong Connect daily quota balance is used up during the continuous

auction session or closing auction session, SZSE Securities Trading Service Company

will not accept further buy orders for the remainder of the day, but still accept sell

orders. In such case, SZSE Securities Trading Service Company will not resume

accepting buy orders for the remainder of the day, unless otherwise prescribed by the

Exchange.

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Article 81 Investors are prohibited from using quota maliciously to affect quota

control by placing large buy orders at low prices when participating in Hong Kong

Connect trading.

Section 5 Investor Suitability Management

Article 82 Institutional investors participating in Hong Kong Connect Trading shall

comply with laws, administrative regulations, government department rules,

regulatory documents and operational rules.

Article 83 In order to participate in Hong Kong Connect Trading, an individual

investor shall at least satisfy the following requirements:

(1) Holding no less than RMB 0.5 million in total assets in the securities and cash

accounts;

(2) Having no serious bad credibility record; and

(3) Not being prohibited or restricted from participating in Hong Kong Connect

trading by any laws, administrative regulations, government department rules,

regulatory documents or operational rules.

The Exchange may at its discretion adjust the aforesaid criteria depending on market

conditions.

Article 84 Investors participating in Hong Kong Connect trading shall be familiarize

themselves with relevant regulations of Hong Kong securities market, rules and

processes regarding Hong Kong Connect trading, set their investment targets taking

into account their risk preferences and conduct an objective assessment of their own

risk tolerance.

Article 85 The Exchange members shall formulate the standards, procedures and

methods for investor suitability management under Hong Kong Connect as well as the

safeguard measures for enforcement of the investor suitability system. Such standards

formulated by the Exchange members shall include but not be limited to investor’s

financial status, knowledge and risk tolerance.

Article 86 The Exchange members shall comprehensively and objectively describe

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the laws and regulations and characteristics of Hong Kong securities market as well as

the rules and processes concerning Hong Kong Connect to the clients.

Article 87 The Exchange members shall enter into a client agreement with their

clients that participate in the Hong Kong Connect trading and specify therein the

rights and obligations of both parties.

Before signing the client agreement, the Exchange members shall fully disclose the

risks associated with Hong Kong Connect trading to their clients, and require their

clients to sign the risk disclosure statement.

The essential provisions for the client agreement and the risk disclosure statement will

be formulated by the Exchange separately.

Chapter IV Handling of Extraordinary Circumstances

Article 88 Upon the occurrence of extraordinary circumstances recognized by the

Exchange that disable or may disable part or all of the trading activities under

Shenzhen Connect, the Exchange will have the discretion to impose such measures as

suspension of trading in Shenzhen Connect shares, suspension of acceptance of part

or all of the orders for Shenzhen Connect shares and temporary closure of the

Exchange market, and will make an announcement accordingly.

Upon the occurrence of extraordinary circumstances recognized by SZSE Securities

Trading Service Company that disable or may disable part or all of the trading

activities under Hong Kong Connect, SZSE Securities Trading Service Company will

have the discretion to suspend part or all of the Hong Kong Connect trading service,

and will make an announcement accordingly.

After the cause which leads to the imposition of trading suspension or temporary

market closure by the Exchange or leads to the suspension of Hong Kong Connect

service by SZSE Securities Trading Service Company ceases to exist, the Exchange

will have the discretion to resume the Shenzhen Connect trading and the Exchange

market, and will make an announcement accordingly. Similarly, SZSE Securities

Trading Service Company will have the discretion to resume the provision of Hong

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Kong Connect service, and make an announcement accordingly.

Article 89 When an extraordinary circumstance as defined in the operational rules of

the Exchange occurs in which the sale value or purchase value of Shenzhen Connect

shares exceeds a specified amount during a short period of time, the Exchange may

take relevant handling measures pursuant to relevant regulations.

Article 90 If, upon the occurrence of extraordinary circumstances recognized by the

SEHK that disable or may disable part or all of the trading activities under Hong

Kong Connect, the SEHK determines to temporarily close the market, resume trading

afterwards, or take other measures, the Exchange will forward the SEHK’s relevant

announcement upon receiving the latter’s notification.

Upon the occurrence of extraordinary circumstances recognized by SEHK Securities

Trading Service Company that disable or may disable part or all of the trading

activities under Shenzhen Connect, SEHK Securities Trading Service Company will

have the discretion to suspend the Shenzhen Connect service, and will make an

announcement accordingly. After the extraordinary circumstance ceases to exist,

SEHK Securities Trading Service Company will have the discretion to resume the

Shenzhen Connect service, and will make an announcement accordingly.

Article 91 The Exchange and SZSE Securities Trading Service Company shall not be

liable for any loss arising from or in connect with extraordinary circumstances or

from the relevant measures adopted by the Exchange and SZSE Securities Trading

Service Company to handle such circumstances.

Chapter V Self-regulation

Article 92 The Exchange and the SEHK will enhance supervision and regulation of

Shenzhen-Hong Kong Stock Connect trading and relevant information disclosure

through cross-border regulatory cooperation.

Article 93 The Exchange will, in accordance with the provisions of the Trading Rules

and other relevant rules, exercise intense monitoring on the unusual trading activities

and extraordinary circumstances that occur in Shenzhen Connect trading.

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Article 94 When SEHK Securities Trading Service Company discovers any of the

unusual trading activities or extraordinary circumstances in Shenzhen Connect trading

as enumerated in the Trading Rules or other rules, it shall notify the Exchange in a

timely manner, alert SEHK participants and require SEHK participants to alert their

clients, and, in accordance with specific circumstances, take such measures as

refusing to provide Shenzhen Connect service for SEHK participants.

SEHK Securities Trading Service Company shall, in a proper manner, require SEHK

participants to alert the clients to the unusual trading activities or possible unusual

trading activities as enumerated in the Trading Rules and other operational rules that

are conducted by the clients in Shenzhen Connect trading, and shall, in accordance

with specific circumstances, reject the client’s subsequent Shenzhen Connect orders.

Article 95 In case that there is a breach of these Measures or other relevant rules of

the Exchange in Shenzhen Connect trading, or a violation and possible violation by

Shenzhen Connect investors of information disclosure requirements prescribed in the

Rules Governing the Listing of Shares on Shenzhen Stock Exchange, the Rules

Governing the Listing of Shares on the ChiNext of Shenzhen Stock Exchange and

other operational rules, the Exchange may conduct an investigation and require SEHK

Securities Trading Service Company to provide relevant materials. The Exchange

may also request the SEHK to take appropriate investigative measures on the relevant

SEHK participants.

Article 96 In case that there is a serious breach of these Measures or other relevant

rules of the Exchange in Shenzhen Connect trading, the Exchange can request the

SEHK to impose relevant regulatory measures or disciplinary sanctions on its relevant

participants, or request the SEHK to ask its participants to issue a verbal or written

warning to the relevant investors and refuse to accept Shenzhen Connect orders from

such investors.

Article 97 Where the unusual trading activities or extraordinary circumstances that

occur in Shenzhen Connect trading have severely disrupted the orderly market of the

Exchange, the Exchange may suspend or restrict the trading authority of SEHK

Securities Trading Service Company, or refuse to accept trading orders submitted by

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SEHK Securities Trading Service Company that involve the relevant investors.

After the unusual trading activities or extraordinary circumstances cease to exist, the

Exchange will have the discretion to restore the trading authority of SEHK Securities

Trading Service Company or resume accepting relevant trading orders.

Article 98 Where Shenzhen Connect investors trade Shenzhen Connect shares in

violation of information disclosure requirements prescribed in the Rules Governing

the Listing of Shares on Shenzhen Stock Exchange, the Rules Governing the Listing of

Shares on the ChiNext of Shenzhen Stock Exchange and other operational rules, the

Exchange may impose regulatory measures or disciplinary sanctions on the investors

concerned pursuant to relevant regulations.

Article 99 Hong Kong Connect investors and the Exchange members shall not violate

provisions of these Measures or commit market misconduct when participating in

Hong Kong Connect trading.

Article 100 Upon discovery by the Exchange members of existing or potential market

misconduct by investors in Hong Kong Connect trading, the Exchange members shall

alert those investors and may also refuse to accept orders from those investors. The

Exchange members shall also report the case to the Exchange in a timely manner.

Article 101 Upon the request of the SEHK or when the Exchange considers necessary,

the Exchange may conduct both on-site and off-site investigations into market

misconduct or other irregular activities that occur in Hong Kong Connect trading and

require the relevant Exchange members and the clients concerned to submit relevant

materials. Such materials can also be made available to the SEHK.

Article 102 Where the Exchange members and their clients commit serious market

misconduct in Hong Kong Connect trading, at the request of the SEHK, the Exchange

may impose regulatory measures or disciplinary sanctions on the Exchange members

and their clients, including requiring the Exchange members to reject Hong Kong

Connect trading orders from the clients concerned.

Article 103 When necessary, the Exchange may conduct inspections on the risk

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management measures and the safe operation of technical systems of SEHK

Securities Trading Service Company as well as the implementation of the relevant

rules of the Exchange by SEHK Securities Trading Service Company.

Article 104 Where SEHK Securities Trading Service Company violates these

Measures or other relevant regulations of the Exchange, the Exchange may impose

regulatory measures or disciplinary sanctions including verbal and written warnings,

summoning the parties concerned for talks, circulation of notice of criticism and

public censure, etc.

Article 105 Where the Exchange members and their clients violate these Measures or

other relevant regulations of the Exchange, the Exchange may impose regulatory

measures or disciplinary sanctions including verbal and written warnings, summoning

the parties concerned for talks, circulation of notice of criticism and public censure,

etc.

Article 106 Where Shenzhen Connect investors, Hong Kong Connect investors,

SEHK Securities Trading Service Company or the Exchange members seriously

violate applicable laws, administrative regulations, government department rules,

regulatory documents or the Exchange rules when participating in Shenzhen-Hong

Kong Stock Connect, the Exchange may report to the CSRC for investigation and

punishment.

Article 107 The Exchange may completely or partially suspend Shenzhen-Hong

Kong Stock Connect trading in accordance with applicable laws, administrative

regulations, government department rules, regulatory documents and rules, or upon

the request of the regulatory authority.

Article 108 The Exchange shall not be liable for any loss arising from or in

connection with its formulation or revision of its rules or from its performance of

self-regulatory duties under the operational rules.

The Exchange members and Hong Kong Connect investors shall be aware of and

acknowledge the relevant provisions in SEHK rules regarding exemption of the

SEHK from liability.

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Chapter VI Supplementary Provisions

Article 109 The following terms in these Measures shall have the meanings given

below:

(1) Shenzhen-Hong Kong Stock Connect: A mutual market access mechanism

between Shenzhen and Hong Kong stock markets by which investors in the

Mainland and Hong Kong may appoint the Exchange members and SEHK

participants to trade designated shares listed in the other’s market through the

securities trading service companies established by the Exchange and SEHK in

Hong Kong and the Mainland, respectively. The Shenzhen-Hong Kong Stock

Connect includes Shenzhen Connect and Hong Kong Connect.

(2) Shenzhen Connect: Investors appoint SEHK participants to trade designated

SZSE-listed shares by sending orders to the Exchange through SEHK Securities

Trading Service Company.

(3) Hong Kong Connect: namely Hong Kong Connect under Shenzhen-Hong Kong

Stock Connect, investors appoint the Exchange members to trade designated

SEHK-listed shares by sending orders to the SEHK through SZSE Securities

Trading Service Company.

(4) Shenzhen Connect Shares: The SZSE-listed shares within the prescribed scope

that are available for trading by investors through Shenzhen Connect.

(5) Hong Kong Connect Shares: The SEHK-listed shares within the prescribed scope

that are available for trading by investors through Hong Kong Connect.

(6) Shenzhen Connect Investors: Investors who appoint SEHK participants to trade

Shenzhen Connect shares or who trade Shenzhen Connect shares directly through

Shenzhen Connect.

(7) Hong Kong Connect Investors: Investors who appoint the Exchange members to

trade Hong Kong Connect shares or who trade Hong Kong Connect shares

directly through Hong Kong Connect.

(8) Trading Day: The trading day of the Exchange.

(9) Shenzhen Connect Trading Day: Trading day for Shenzhen Connect share as

announced by SEHK Securities Trading Service Company.

(10) Hong Kong Connect Trading Day: Trading day for Hong Kong Connect shares as

announced by SZSE Securities Trading Service Company.

(11) Exchange Member: The securities company that has obtained the regular

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membership of Shenzhen Stock Exchange.

(12) SEHK Participant: The Exchange Participant (EP) as defined in the SEHK Rules

of the Exchange.

(13) The Deadline for Periodic Review: In the case of Shenzhen Connect shares, the

deadline for periodic review of the relevant index as defined in compilation

methodologies of SZSE Component Index and SZSE Small/Mid Cap Innovation

Index; in the case of Hong Kong Connect shares, the deadline for periodic review

of the data used as defined in the methodology of Hang Seng Composite Index;

(14) A Share: RMB common shares listed on SZSE or SSE.

(15) H Share: Shares that issued by companies registered in the Mainland and are

listed on SEHK.

(16) A+H Companies: Companies registered in the Mainland with shares listed both

on the Exchange and SEHK or both on SSE and SEHK.

(17) SSE Risk Alert Board: the risk alert board launched by SSE for the shares of

listed companies that are put under risk alert.

(18) At-auction Limit Order: An order input during the pre-opening session or closing

auction session and executed at a specified or better price as prescribed in the

SEHK Rules of the Exchange.

(19) Enhanced Limit Order: An order input during the continuous trading session and

executed at a specified or better price as prescribed in the SEHK Rules of the

Exchange.

(20) Odd Lot: The amount of a security that is less than one normal unit of trading.

(21) Price stabilization period: The price stabilization period of a particular stock as

stipulated in its prospectus.

(22) Margin Trading under Shenzhen Connect: The purchase of Shenzhen Connect

shares by Shenzhen Connect investors using the cash obained through securities

margin financing in Hong Kong stock market.

(23) Covered Short Selling under Shenzhen Connect: The sale of Shenzhen Connect

shares via Shenzhen Connect that are borrowed by Shenzhen Connect investors

through share lending in Hong Kong stock market.

(24) Share Lending under Shenzhen Connect: The lending of Shenzhen Connect

shares by SEHK participants to their clients or other SEHK participants, or the

lending of Shenzhen Connect share by eligible institutions to SEHK participants

in Hong Kong stock market.

(25) Covered Short Selling Ratio of Shenzhen Connect Shares: The ratio of covered

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short selling volume of a single Shenzhen Connect stock during a single Shenzhen

Connect trading day to the total number of shares of such stock held by HKSCC

as a nominee on the previous Shenzhen Connect trading day.

(26) Non-trading Transfer of Shenzhen Connect Shares: The change of beneficial

owner of Shenzhen Connect shares through any means other than trading on the

Exchange market.

(27) Rights Issue: SEHK-listed companies offer their existing shareholders the rights

to subscribe for new shares in proportion to their existing holding. The

subscription rights are transferable in the secondary market.

(28) Open Offer: SEHK-listed companies make an offer to the existing shareholders to

subscribe for new shares. However, entitlements from an open offer are not

transferable.

(29) Market Misconduct: Insider dealing, false trading, price rigging, disclosure of

information about prohibited transactions, disclosure of false or misleading

information inducing transactions, stock market manipulation and other forms of

market misconduct as defined by Hong Kong laws, the SFC and the SEHK.

Article 110 Institutions that rent marketing units from the Exchange members for

participation in Hong Kong Connect shall enter into a Hong Kong Connect service

contract with SZSE Securities Trading Service Company and shall be governed by the

relevant regulations applicable to the Exchange members regarding participation in

Hong Kong Connect, except the part concerning the Exchange members’ brokerage

business.

Non-brokerage business such as proprietary business and asset management business

of the Exchange members, and the institutions identified in the above paragraph shall

meet the relevant requirements of the relevant regulatory authorities when involved in

Hong Kong Connect

Article 111 Information disclosure by Shenzhen Connect share issuers and Hong

Kong Connect share issuers as well as relevant persons with disclosure obligations

shall be subject to the supervision of local exchanges where the shares are listed and

be governed by the applicable laws, administrative regulations, government

department rules and regulatory documents of the jurisdiction where the shares are

listed as well as the rules of the exchange.

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Article 112 HKSCC shall not be subject to the Exchange regulations on disclosure of

equity changes of listed companies even if the change of equity in Shenzhen Connect

shares held by HKSCC as a nominee reaches the threshold for equity changes of listed

companies.

Article 113 Shenzhen Connect investors can have access to the information disclosed

by Shenzhen Connect share issuers and relevant persons with disclosure obligations

on the Exchange website and through other information disclosure media designated

by the CSRC.

Article 114 Hong Kong Connect investors can have access to the information

disclosed by Hong Kong Connect share issuers and relevant persons with disclosure

obligations on the website HKEXnews and the websites of relevant issuers.

Article 115 HKSCC shall, in its own name, exercise the rights to Shenzhen Connect

share issuers as per the instruction of Shenzhen Connect investors.

Specific regulations on HKSCC’s participation as a nominee in online voting at

shareholders’ general meetings of SZSE-listed companies shall be formulated by the

Exchange separately.

Article 116 When SZSE-listed companies make rights issues to Shenzhen Connect

investors with the approval of the regulatory authority, HKSCC will participate in the

subscription as a nominee subject to the Exchange’s regulations on share issuance and

subscription.

The specific matters relating to Hong Kong Connect investors’ participation in the

subscription for rights issues or open offers made by SEHK-listed companies to Hong

Kong Connect investors with the approval of the regulatory authority shall be

governed by the relevant regulations of the CSRC and the CSDC.

Article 117 Investors shall comply with investor suitability regulations and

operational rules in Hong Kong market when participating in the SZSE ChiNext

market through Shenzhen Connect.

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Article 118 Custody transfer is allowed concerning the Hong Kong Connect shares

purchased by investors. The specific matters relating to custody transfer shall be

governed by the relevant regulations of the CSDC.

Article 119 Regulations governing the specific matters relating to the margin trading

and securities lending services provided by the Exchange members for Hong Kong

Connect trading will be formulated by the Exchange separately.

Article 120 Matters concerning the trading, shareholding limit, exercise of

shareholder’s rights and information disclosure of the securities that can only be sold

but not purchased through Shenzhen-Hong Kong Stock Connect under these

Measures shall be governed mutatis mutandis by the provisions in these Measures

governing Shenzhen Connect shares and Hong Kong Connect shares.

Article 121 The terms “exceed”, “more than”, “lower than” and “less than” in these

Measures do not include the given figures, whereas the terms “reach” and “below”

include the given figures.

Article 122 These Measures and any amendment hereto shall be subject to the

approval of the CSRC after being adopted by the board of directors of the Exchange.

Article 123 The power to interpret these Measures shall rest with the Exchange.

Article 124 These Measures shall take effect on [ ], 2016.

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Disclaimer:

The English version of the Measures of Shenzhen Stock Exchange for the

Implementation of Shenzhen-Hong Kong Stock Connect Program (Exposure

Draft) is for reference only. In the event of any discrepancy between the English

version and the Chinese version, the Chinese version shall prevail. Shenzhen

Stock Exchange shall not be liable for any losses, damages or disputes or any

other liabilities of whatsoever nature, suffered or incurred as a result of or in

connection with such discrepancy.