The central bank on Tuesday announced a capital market connectivity mechanism between the Chinese mainland and Hong Kong.
Hong Kong Securities Clearing Co. Ltd. is allowed to open a special renminbi bank account with a mainland bank, which will deal with businesses on the Shanghai Stock Exchange and Shenzhen Stock Exchange, according to a circular jointly released by the People's Bank of China (PBOC) and the China Securities Regulatory Commission (CSRC).
China Securities Depository and Clearing Co. Ltd. is also allowed a special bank account at a Hong Kong bank to deal with the Hong Kong Stock Exchange, said the circular.
The two banks should abide by the law to carry out obligations of anti-money laundering, anti-terrorist financing and anti-tax evasion, according to the circular.
The mechanism aims to facilitate capital market connectivity between the Chinese mainland and Hong Kong and standardize cash flow, said the circular.