CSRC strictly controls the “fake foreign investment” via Shanghai/Shenzhen-HongKong Stock Connect, the comment from one Securities Company is: Regulate the northbound return transactions of mainland investors, and continue to promote high-level opening up to the oversea market.

On December 17, 2021, the China Securities Regulatory Commission publicly solicited opinions on the amendment to the "Certain Provisions on the Interconnection Mechanism for Transactions in the Mainland and Hong Kong Stock Markets", and will no longer allow mainland investors to invest in A shares through the interconnection mechanism. This move is conducive to strengthening the supervision of return transactions by mainland investors, and has little impact on the capital of northbound transactions, and the high-level opening of the capital market will not be affected.

On December 17, 2021, the China Securities Regulatory Commission publicly solicited opinions on the revision of the "Certain Provisions on the Interconnection Mechanism for Transactions in the Mainland and Hong Kong Stock Markets".

The "Regulations" propose to amend the first paragraph of Article 13 to read "Investors shall legally enjoy the rights and interests of stocks purchased through the trading interconnection mechanism of the mainland and Hong Kong stock markets.

Investors who are available to trade via Shanghai-HongKong and Shenzhen-HongKong Stock Connect do not include the mainland investors."

The Northbound Stock Connect will no longer allow mainland investors to participate in.

The original intention of the Stock Connect trading system is to allow foreign investors to conveniently invest in A-shares under the interconnection mechanism through Hong Kong brokers.

However, in recent years, some mainland investors have opened securities accounts in Hong Kong and then traded A shares through the northbound, giving the market the impression of "fake foreign capital" in northbound transactions.

This revision of the system prohibits individuals holding Mainland China ID and legal institutions and legal entities registered in the Mainland China from trading A shares through the Northbound Trading of Stock Connect.

Three types of investors are affected more.

According to research, there are three scenarios for mainland investors to trade A shares via Northbound Stock Connect:
First, the mainland investors who hold the overseas assets have enabled the northbound trading function of Hong Kong stock accounts to achieve the goal of global allocation within one account when allocate the overseas assets;
Second, for investors who trade stocks with low interest rates, the lowest financing interest rate in the Hong Kong market is less than 2%, which has an interest rate advantage over the Mainland's 6% to 7%.
Third, According to the cases that the Securities Regulatory Commission had
investigated, there’re some traders who manipulated the market illegally, by
manipulated multiple accounts in both Hong Kong and China mainland
markets. They had manipulated stock prices of several underlyings of
“Shanghai Stock Connection” by spoofing, deliberately pushing up stocks
prices, trading between accounts they controlled etc.

It has little impact on the capital of northbound transactions and has a deterrent effect on illegal transactions.

According to the China Securities Regulatory Commission, there are 39,000 mainland investors who have traded via northbound s in the past three years. The percentage of northbound transactions by mainland investors is about 1% of all northbound transactions. In addition, the regulations are accompanied by a one-year transitional period arrangement which will has little impact on the asset amount of northbound trading.

This time, the regulator had published the accurate number of trading accounts, the proportion of transactions, and the status of the A-share accounts of investors with the investors’ identities of these accounts.
These are all due to the identification code system of northbound trading.
This
system of penetrating account model is an important application for cross-border transaction regulation. The recent regulatory actions were warnings to some northbound transactions that had been walking on fine line of regulation yet those actions had no impact on mainstream funds.

沪深股通严管“假外资”，某券商点评互联互通新规：规范内地投资者北向返程交易，高水平对外开放持续推进

2021年12月17日，证监会就修改《内地与香港股票市场交易互联互通机制若干规定》公开征求意见，不再允许内地投资者通过互联互通机制投资A股。此举有利于加强对内地投资者返程交易行为的监管，对北向交易资金面影响不大，资本市场高水平对外开放不受影响。


2021年12月17日，证监会就修改《内地与香港股票市场交易互联互通机制若干规定》公开征求意见。

《规定》提出，将第十三条第一款修订为“投资者依法享有通过内地与香港股票市场交易互联互通机制买入的股票的权益。

沪深股通投资者不包括内地投资者”。

▍北向陆股通不再允许内地身份投资者参与。

陆股通制度的初衷是为了让境外投资者通过香港经纪商，在互联互通的机制下便利的投资A股。

但是，近年来，有部分内地投资者在香港开立证券账户，再通过北向交易A股，给市场造成了北向交易中有“假外资”的印象。

本次制度修订，禁止持有中国内地身份的个人和在内地注册的法人及法人组织通过陆股通北向交易A股。

▍三种投资者的交易受影响较大

根据调研，内地投资者在港北向交易A股存在三种场景：

第一，拥有海外资产内地投资者，在配置境外资产的同时，开通了港股账户北向功能，以达到一个账户全球配置的目的；
第二，低利率配资交易股票的投资者，香港市场配资利率最低不到2％，比内地6-7％的两融，有利率优势；

第三，操纵市场的违规交易者，根据证监会曾查处北上资金操纵股价的案例，有投资者利用多个香港账户和内地账户，通过虚假申报、盘中拉抬、对倒等手法，操纵“沪股通”标的股票。

▍对北向交易资金面影响不大，对违规交易起到震慑作用。

据证监会披露，近三年有北向交易的内地投资者3.9万名，内地投资者的北向交易占比全部北向的比例为1％左右，另外法规附有一年的过渡期安排，对市场交易的资金面影响不大。

本次监管机构公布了准确的交易账户数、交易占比数以及拥有这些账户身份投资者的A股账户情况，这些都归功于北向交易的识别码制度，这是穿透式账户模式在跨境交易监管中的重要应用，对一些打擦边球的北向交易是一次警示，对主流资金没有影响。