🇨🇳Shanghai Stock Exchange: SSE, STAR Market, GDR and the Bond Route

Concept

A foreign company cannot list its shares on the Shanghai Stock Exchange. Direct listing by a foreign issuer on the SSE does not exist: the PRC Securities Law is built around issuers incorporated under Chinese law, and it contains no admission regime for a foreign legal entity at all.

Three workarounds exist. CDR (中国存托凭证), the Chinese Depositary Receipt: the mutual-receipt mechanism is open to companies listed in the United Kingdom, Switzerland and Germany (CSRC provisions, October 2018, as amended February 2022), and in seven years nobody has used it. Red-chip structure: an offshore holding company with Chinese assets returns to STAR at capitalisation of ≥ CNY 10 billion, or ≥ CNY 5 billion with revenue ≥ CNY 500 million. Bonds: a renminbi issue by a non-resident on the exchange is legally available but statistically marginal. Above all three sits the negative list — a joint-stock company with foreign investment must demonstrate that its business does not fall within the restrictions on foreign investment access (2024 edition, NDRC, PDF).

On the SSE the capital and the ownership chain may be foreign. The issuer may not. The map of Chinese instruments sits in the China hub; the venue that does admit a foreign issuer directly is Hong Kong.

The 2023 registration reform was not a liberalisation. Fourteen months after it, on 30 April 2024, the SSE raised the last-year net profit requirement from CNY 60 million to CNY 100 million, the cash flow requirement from CNY 100 million to CNY 200 million, and the market capitalisation under the third standard from CNY 8 billion to CNY 10 billion. The barrier is set by numbers, not by the type of regime.

Matrix: funding objective → instrument → non-⁠resident access

The matrix answers what part of the Chinese capital market is open to a foreign person, cut by objective rather than by venue.

How the market is organised

The mainland market is divided between three exchanges by administrative fiat, according to issuer type: filing on the wrong board is cut off regardless of the financials.

At 31 December 2025 the SSE held 2,340 companies and CNY 64.78 trillion of capitalisation, the SZSE 2,887 and CNY 43.24 trillion, and the Beijing Stock Exchange 288 and CNY 0.87 trillion (Baker McKenzie).

The issuer count depends on the base used: the SSE's own listing register showed 2,302 companies at the end of 2025 (2,278 at the end of 2024, plus 42 new listings, less 18 delistings), and 2,319 companies against 2,357 traded share lines at 4 September 2026, because some issuers carry both an A-share and a B-share.

Inside the SSE there are two boards: the Main Board (主板) for mature profitable companies, and the STAR Market (科创板) — 592 companies and more than CNY 9.6 trillion at 5 November 2025 (SSE, published 10.11.2025), and 616 companies and CNY 16.52 trillion by 4 September 2026; it is the only mainland board that admits loss-making issuers, weighted voting rights and red-chip structures. ChiNext is stricter than STAR on profit, but under a CSRC decision of 9 April 2026 it too admits loss-making companies (CSRC); the BSE in Beijing is a small-cap board starting at CNY 200 million of capitalisation.

A-shares and B-shares. A-shares are renminbi instruments for residents and for admitted foreign channels. B-shares are a 1992 relic denominated in dollars: roughly 80 issuers across the two exchanges, 41 of them on the SSE, valuations around 60% of comparable A-shares, rules unchanged since 1995, and no new offerings (AllBright Law, September 2025).

The registration-based IPO system (注册制) was extended to every board on 17 February 2023 (CSRC Shanghai): substantive review sits with the exchange — acceptance, rounds of written inquiries (问询), the Listing Review Committee — and the CSRC registers the offering within 20 working days. This is not liberalisation. The State Council's "New Nine Articles" of 12 April 2024 require regulators to "hold the entry gate to issuance and listing firmly shut" (CSRC).

SSE Main Board: thresholds as amended 30 April 2024

Meeting any one of three sets of financial criteria is sufficient.

Do not take these thresholds from the English-language SSE website: it is doubly out of date, and by a wide margin. The English listing overview has not been updated since 31 October 2019 and still asks for cumulative three-year net profit of CNY 30 million with operating cash flow of CNY 50 million, while the English translation of the Listing Rules is frozen in the February 2023 edition — last-year profit of CNY 60 million and CNY 8 billion under the third standard. The Chinese texts in force say CNY 100 million and CNY 10 billion, which is what the table above reflects. The figures come from the SSE Main Board section, cross-checked against Sina Finance. Any English-language due diligence on admission thresholds has to be reconciled against the Chinese rulebook, not against the exchange's own English pages.

Non-financial requirements:

• Operating history — ≥3 years.
• No change of actual controller for 3 years.
• Post-issue share capital — ≥ CNY 50 million.
• Free float — ≥25% (≥10% where capital exceeds CNY 400 million).
• Three years of CAS financial statements with an audit (audit in China).
• A 36-month lock-up for the controlling shareholder.

Since 1 January 2025 a stock is flagged ST if dividends over three years amounted to less than 30% of average annual profit and less than CNY 50 million (SSE, 30.04.2024): reinvesting all post-listing profit is not an option.

STAR Market: five listing standards

The five criteria sets in Article 2.1.2 of the STAR Listing Rules are a construction in which market capitalisation substitutes for profit and revenue in full: under the fifth standard an issuer needs neither.

Three of the five standards add a condition beyond the financial thresholds.

The standards follow the SSE STAR section and the Listing Rules, PDF. Post-issue share capital is ≥ CNY 30 million and the track record 2 years.

The weighted-voting-rights scale and the red-chip scale are different, and the two are routinely conflated: a red-chip — an offshore holding company with Chinese assets — has its own scale, set by the innovative-enterprise pilot regime (State Council No. 21 (2018), extended by CSRC announcements No. 20 (2020) and No. 20 (2021) — CSRC).

On STAR itself a red-chip alternatively qualifies on an expected capitalisation of ≥ CNY 10 billion or ≥ CNY 5 billion with revenue ≥ CNY 500 million.

The binding constraint is often not the financials but the sci-tech attribute criteria (科创属性), tightened on 30 April 2024.

The revenue alternative matters for an issuer with large but flat revenue (CNStock). Real estate and financial businesses are excluded outright.

The fifth standard and the STAR Growth Tier are the story of 2025–2026. From June 2023 the standard was frozen in practice: two years without a single approval, and the number of companies carrying the "U" marker fell from 54 to 32. It was unfrozen by the CSRC's "1+6" package of 18 June 2025, which established the Sci-Tech Growth Tier (State Council, text of the opinion). The first loss-making applicant to clear the STAR listing committee after the pause was Wuhan Healthgen Biotechnology (禾元生物), on 1 July 2025: a planned raise of CNY 2.4 billion on 2024 revenue of CNY 25.2 million (SSE Listing Committee, result of the 21st meeting of 2025, PDF; prospectus, June 2025, PDF). The first-year tally at 12 June 2026: 59 applications to STAR, of which 24 from loss-making companies and 9 under the fifth standard (21jingji); the perimeter has been widened to commercial space and developers of large AI models (SSE, "Guidance No. 10").

How the Growth Tier works. Every loss-making technology issuer enters it automatically, the letter "U" is appended to the short name, and periodic disclosure of the reasons for the losses plus a risk warning on the first page of the accounts are mandatory. Exit from the tier, for newly registered issuers, requires either two consecutive years of positive net profit with a cumulative total ≥ CNY 50 million, or one profitable year with revenue ≥ CNY 100 million. An investor buying the paper of a newly listed loss-making issuer signs a separate risk acknowledgement on top of the general STAR requirements. In the first half of 2026 the tier held 36 companies: revenue up 29.1% year on year, aggregate losses down 62.3%.

Venue comparison: SSE Main Board, STAR, ChiNext, HKEX

The mainland demands several times more profit than Hong Kong, yet admits a loss-making technology issuer at a lower capitalisation than is generally assumed.

The formal admission conditions diverge more than the financial ones.

The cost column is the one that reorders the table. Mainland pricing is flat: 9.41% on STAR, 10.18% on the SSE Main Board and 11.54% on ChiNext, whatever the size of the deal, because fees there are paid by stage and success fees have been unlawful since 15 February 2025. Hong Kong prices on a curve instead — double-digit on a small offering, 1.4–2.9% on a large one — so a mainland issuer raising more than about HK$3 billion pays less in Hong Kong than at home while also being paid in convertible currency. New York is the expensive row on commission and the deep one on capital. The full six-venue comparison, including the LSE and SGX and the axes of timeline, liquidity and access to mainland savings, sits in the Hong Kong listing guide. The wider grid of thirteen boards — with Tokyo, Seoul, SGX Catalist, HKEX GEM and Nasdaq Dubai, and with public float, rule-based lock-up and the gatekeeper filter as separate axes — is in listing venues for Asian issuers; the ChiNext capitalisation above is the CNY 1.5 billion of Standard 2 in the 2024 revision of the ChiNext Listing Rules (Article 2.1.2), which replaced the CNY 1 billion of the 2020 text.

The Hong Kong profit gate follows Chapter 8 of the HKEX Listing Rules: the profit test has been in force in this form since 1 January 2022, while the rest of the chapter has been rewritten more than once since. The cost figures are drawn from 183 IPOs between January 2025 and 17 June 2026 (Dahe Cube).

The IPO process: steps, timelines, cost

The path from decision to opening bell takes 2.5 to 4 years: the horizon covers building three years of CAS accounts and converting into a joint-stock company, 12 to 24 months of active preparation and 193 to 691 days of review, while the statutory "three months" covers only the final leg.

Preparation, 12 to 24 months. Conversion of a limited liability company into a joint-stock company is carried out at the net book value of assets (整体变更); done any other way, the three-year track record resets to zero (company form in the PRC). Capitalising retained earnings in the process creates an individual income tax event for natural-person shareholders. Then come three years of CAS audit and a tutoring period under CSRC supervision. The sponsor (保荐机构) supervises the issuer for three years after listing and, under Article 85 of the Securities Law, is liable to investors for false disclosure with a presumption of fault; on STAR it also subscribes for 2–5% of the offering with a 24-month lock-up.

Review and registration. Acceptance of the application takes 5 working days, the first round of inquiries 20 working days, the number of rounds is unlimited, and CSRC registration takes 20 working days, against a headline norm of "no more than 3 months" (SSE). That norm is fictitious: it excludes the issuer's response time, suspensions and on-site inspections. Actual elapsed time from acceptance to listing across 335 companies between 2023 and March 2024: Main Board 193 days, BSE 263, STAR 403, ChiNext 691 (Gelonghui). The 23× P/E cap was abolished together with the approval system; the price is set by inquiry-based bookbuilding (询价) among institutional investors with the highest bids trimmed off, and the first five trading days run without price limits. In H1 2026 the average offering P/E was 25× against 19× a year earlier (EY, PDF).

Rejections, 2024 to 2026. In 2025 the A-share boards accepted 300 applications, 115 companies listed, and 108 processes were terminated, of which 101 were voluntary withdrawals — 75% fewer than in 2024 (Sina Finance). H1 2026 brought 242 applications, up 37%. The old formula that an on-site inspection equals a withdrawal has broken down: of the 40 companies selected for inspection as at 1 July 2026, one withdrew, against 71–82% in 2021–2023 (21jingji). Market-wide in 2026: by 3 September there had been 114 IPOs raising CNY 206.4 billion, an average deal size of CNY 1.811 billion (数据宝 via Eastmoney), with more than half of the new listings coming from the Beijing Stock Exchange.

Cost. Average issuance expenses run to CNY 80.6 million, with a median of CNY 71.9 million, and an average take rate of 11.15% of proceeds: underwriting and sponsor fees CNY 56.4 million, audit CNY 13.3 million, legal CNY 6.7 million. STAR is the most expensive in absolute terms (CNY 139 million) and the cheapest in percentage terms (9.41%); the BSE is the reverse.

What is open to a foreign company: CDR and red-⁠chip

A CDR is a receipt over the shares of an issuer incorporated outside the PRC; it is the only formally open entry to the SSE for a foreigner, and simultaneously the least used.

The innovative-enterprise and red-chip pilot rests on State Council Notice 2018 No. 21 and CSRC announcements 2020 No. 20 and 2021 No. 20 (CSRC). The thresholds: a red-chip company already listed abroad needs capitalisation ≥ CNY 200 billion or, after the April 2020 easing, ≥ CNY 20 billion plus proprietary leading technology; an unlisted one needs revenue ≥ CNY 3 billion at a valuation ≥ CNY 20 billion. The two sets of thresholds do not compete: the pilot numbers govern a return to the mainland outside STAR, while a listing on STAR itself runs under Article 2.1.3 of the STAR Listing Rules — CNY 10 billion, or CNY 5 billion with revenue ≥ CNY 500 million. The only realised case is Ninebot (689009.SH) in October 2020. One detail matters for VIE structures: issuing shares requires ministerial and NDRC clearance, while issuing CDRs does not (Zhong Lun); see also holding structures and national security review.

The mutual depositary receipt regime covers the United Kingdom, Switzerland and Germany: a company listed on a qualifying overseas exchange may issue CDRs on the SSE Main Board. The current edition of the SSE Interim Measures on the listing and trading of depositary receipts took effect on 18 July 2023 and imposes on a CDR issuer the mirror image of the GDR profile: capitalisation averaged over 120 trading days ≥ CNY 20 billion, an overseas listing record of ≥3 years, and a minimum issue of ≥50 million receipts over underlying shares worth ≥ CNY 500 million. Individual investor eligibility is assets of ≥ CNY 500,000 averaged over 20 trading days and ≥24 months of experience.

In the seven years since June 2019 nobody has issued — because of the thresholds, the reconciliation of accounts to CAS, and the absence of any economic point, since the renminbi raised cannot be freely taken out. Even so, on 14 January 2026 the Ministry of Finance, the State Taxation Administration and the CSRC extended the preferential CDR tax regime into 2026–2027, for a market with a single issuer (Sina Finance).

Planning an SSE entry through a CDR as a foreign issuer is not a viable strategy. Zero issues in seven years, with the rulebook in force and the tax relief being rolled forward, is not a case of "it has not happened yet" — it is a stable state of the market. One workable variant exists: a red-chip company with Chinese assets on STAR.

GDR: the route in the opposite direction

A GDR is a receipt over the shares of a Chinese listed company placed in London, Zurich or Frankfurt; it is a channel for taking a Chinese issuer out, not for bringing a foreign issuer in.

The mechanism launched on 17 June 2019 as the Shanghai–London Stock Connect, with Huatai Securities as the first issue; in February 2022 the CSRC extended it to Switzerland and Germany and simultaneously allowed the issue of new CDRs and GDRs not backed by existing shares — that is, raising capital rather than merely cross-listing.

The GDR requirements follow the SSE Interim Measures for the Listing and Trading of Depository Receipts under the Stock Connect Scheme between the SSE and Overseas Stock Exchanges (Revised in 2023), PDF — issued and effective on 18.07.2023, with Articles 105(2) and 105(3) setting out the ≥1-year listing record and the ≥ CNY 20 billion average A-share capitalisation over 120 trading days; analysis by Han Kun.

Neither the 90% price floor nor the 120-day conversion ban appears in the SSE Measures themselves: both are set by the CSRC "Provisions on the Supervision of Depositary Receipt Business under the Interconnection between Domestic and Overseas Stock Exchanges" (February 2022), Articles 36 and 38, and are cited here from the Zhong Lun analysis quoting their text. For the SIX GDR standard, the issuer of the underlying shares must have reported equity capital of at least CHF 25 million on the first day of trading (SIX Listing Rules, Articles 15(1) and 91, effective 12 May 2025).

The tightening ran wider than GDRs alone: the "Trial Administrative Measures for Overseas Securities Offering and Listing" were issued on 17 February 2023 and took effect on 31 March 2023, covering both direct and indirect (offshore holding company, VIE) listings, requiring overseas sponsors and underwriters to file with the CSRC, and carrying fines of CNY 1–10 million for the company and CNY 0.5–5 million for the individuals responsible.

The channel collapsed without anything being formally banned. The issue chronology on SIX Swiss Exchange: 9 listings in 2022, 8 in 2023, and zero in 2024, 2025 and 2026 — the last one was completed in December 2023 (SIX media releases). London saw four Chinese GDRs across the life of the scheme, for roughly $5.84 billion in total; Germany saw none. A typical deal looked like this: Zhejiang Huayou Cobalt, 7 July 2023 — 50 million GDRs at $11.65, gross $582.5 million, one receipt over two A-shares (SIX). In June 2023 four companies withdrew GDR plans within two weeks, five more followed by year-end, and seven more in 2024, including Sany Heavy Industry and East Money (21jingji). Sanhua cancelled an approved CNY 5 billion GDR and went to Hong Kong instead.

The cause is not a prohibition but a destroyed deal economics. Before 2023 GDRs were placed at a 10–20% discount to the A-share price and, once the cooling-off period expired, converted back and sold on the mainland at the full price. The filing regime, the requirement to justify a business purpose and the conversion restriction closed that arbitrage. The A+H route has taken over the GDR's function: there were 19 A+H offerings in 2025 (Sina Finance, 23.07.2026) — the principal channel from a Chinese issuer to Western capital today is Hong Kong, not the depositary receipt.

History of the exchange: from the Shanghai brokers of 1866 to the SSE of 2026

Today's SSE was established on 26 November 1990 and opened trading on 19 December of the same year, yet in Chinese usage the exchange cites two founding years — 1990 and 1891 — acknowledging continuity with the pre-revolutionary Shanghai market while keeping itself legally separate from it.

Prehistory: Shanghai as an exchange city before 1949

Exchange trading existed in Shanghai for eighty-three years before the People's Liberation Army arrived, and it was interrupted in a single day.

The source is the Milestone section of the SSE website together with historiographic compilations resting on the Encyclopaedia of China. The continuity is institutional as well as rhetorical: the first trading floor of the revived exchange was the Astor House Hotel (浦江饭店) in the former International Settlement — the very quarter in which the pre-revolutionary market grew up; in December 2018 the China Securities Museum (中国证券博物馆) opened there, operating with the exchange under a "one institution, two signboards" arrangement. In June 2025 the SSE archive was added to the sixth national register of documentary heritage of the PRC.

The 1990 revival and the "eight old stocks"

The exchange was established with State Council sanction and by permission of the head office of the People's Bank of China; its first general manager was the 35-year-old 尉文渊, who struck the gong on 19 December 1990, and the first chairman of the board was 李祥瑞. The date of 19 December carries a triple load: the day of first trading, the base date of the SSE Composite index, and — from 1997 — the day the exchange moved into its new building.

The first year was empty: not a single new listing took place on the SSE in the whole of 1991, and capital raised came to CNY 0.24 billion against CNY 1.011 billion in 1990. Legitimacy arrived with Deng Xiaoping's "southern tour" in January 1992: 21 listings were added during 1992.

The starting eight issuers are known as the "eight old stocks" (老八股): 延中实业 (600601), 真空电子 (600602), 飞乐音响 (600651), 爱使电子 (600652), 申华电工 (600653), 飞乐股份 (600654), 豫园商城 (600655), 浙江凤凰 (600656). Two of the eight no longer trade, and the fate of one of them is telling: 600656 (浙江凤凰 → 博元投资) was delisted on 13 May 2016 and became the first company in the history of the PRC securities market removed from quotation for a material breach of disclosure law; 600652 was delisted on 21 June 2022. One detail for accuracy: the SSE listing register dates only six of the eight to 19 December 1990 — 600602 is recorded from 21 February 1992, and that is the listing date of its B-share, the first B-share in China.

Stages 1990–⁠2026

Across thirty-six years the market passed through seven distinguishable stages, and the boundary between them was almost always either a crisis or a reform of admission.

Dates and events follow the SSE chronicle and the exchange's statistical yearbooks; the index and capitalisation series come from the SSE Statistical Yearbook, 2025 volume.

The "327 incident" and the closure of the government bond futures market

On 23 February 1995, in the futures contract coded "327" — over the three-year treasury bonds of the 1992 issue, CNY 24 billion in size — an episode occurred that cost the country its derivatives market for ten and a half years.

The speculative gap was created by opacity: the 9.5% coupon was topped up by an inflation subsidy (保值贴补率) whose size the Ministry of Finance did not disclose. On the evening of 22 February the Ministry announced new three-year bonds at 14% with indexation, and the market concluded that a large top-up on the old issue was coming. During 23 February the broker 辽国发 dumped 2 million lots of shorts against a per-participant limit of 400,000 lots, then reversed into a long. At 16:22:13, on the order of 万国证券 general manager 管金生, the firm submitted 23 orders of 900,000 lots each without sufficient margin — 20.7 million lots of shorts; in 7 minutes and 47 seconds the price was driven down from 151.30 to 147.90. Turnover for the day across all contracts reached 18.24 million lots, around CNY 850 billion, of which 86.6% of trades were the short side of a single participant.

At 23:00 the same day the SSE declared all trades after 16:22:13 void. The loss to 万国证券 came to CNY 5.6 billion; overnight the Shanghai municipal government coordinated an injection of CNY 1.5 billion through treasury repo and bank funding. 管金生 was arrested in May 1995 and sentenced on 3 February 1997 to 17 years for bribery and misappropriation — no securities offence was charged. The exchange's general manager 尉文渊 resigned in September 1995. On 17 May 1995 the CSRC suspended the experiment; the closed market's debts were still being written off in 2001, and government bond futures returned to China only on 6 September 2013, and then on the CFFEX.

The non-⁠tradable share reform of 2005–⁠2007

The 股权分置改革 reform eliminated the split of Chinese issuers' equity into tradable and non-tradable shares without changing a single figure of registered capital.

Before the reform a single issuer carried two classes of ordinary shares side by side: tradable shares (流通股) held by the public, and non-tradable shares (非流通股) held by the state and by "legal persons", which by law could not circulate on the exchange. The scale shows in the SSE data for 2004: against total capitalisation of CNY 2,601.4 billion, the free-float portion was CNY 735.1 billion — only 28.3% of the market was in circulation.

The consideration mechanism (对价) was structured as the purchase of a right, not as an issue of stock. Holders of non-tradable blocks "bought" the right to trade by paying holders of tradable shares a consideration — usually bonus shares, less often cash or warrants. The SSE's primary share-capital movement table shows this literally: in rows where the reason for the change is 股改, the increase in total capital is zero while the increase in tradable A-shares is positive. Companies that had completed the reform temporarily carried the letter "G" — from 股改 — in front of the ticker.

The pilot was opened by 三一重工 (600031) on 17 June 2005, releasing 21 million shares into circulation; large issues followed — CITIC (140 million, 15.08.2005), Baosteel (852.94 million, 18.08.2005), Minsheng (673.58 million, 26.10.2005), SAIC (334.15 million, 24.10.2005). The pace on the SSE: 126 companies in 2005 and 690 in 2006 — the bulk of the market went through the reform in a single year.

The price was paid by the primary market. Between 9 May 2005 and 23 June 2006 there was not a single new listing on the SSE for 410 days, and IPO proceeds on the main board fell to CNY 2.855 billion in 2005 against CNY 23.724 billion in 2004 and CNY 118.023 billion in 2006 — a fall of eight times followed by a rise of forty-one. Unlocked supply and an inflow of retail money produced a bubble: capitalisation to GDP moved 12.33% (2005) → 32.63% (2006) → 99.91% (2007), stamp duty receipts rose 11.7-fold during 2007, and the number of accounts went from 39.0 to 58.2 million.

The 2015 crisis, the "national team" and the four-⁠day circuit breaker

The mid-2015 crash is the only episode in which trading was halted in nearly half the market and the support measures were escalated to the level of a criminal investigation.

Over five and a half months to 12 June 2015 the index gained around 60% and reached an intraday high of 5,178.19. The trigger for the fall was a ban on brokers servicing over-the-counter leverage (场外配资), published by the CSRC on the weekend of 13 June. What followed: the week of 15–19 June, minus 13.32%, with 1,088 of 2,780 stocks at the lower limit on 19 June; margin debt fell from CNY 2.26 trillion to CNY 1.46 trillion between 18 June and 8 July; the three weeks to 3 July delivered −28.6%, the worst result since 1992.

The response was administrative. The capital of 中国证券金融股份有限公司 was raised from CNY 24 billion to CNY 100 billion; on 4 July, 21 brokers undertook to buy blue chips through ETFs for no less than CNY 120 billion and not to sell below the 4,500 level; the exchanges suspended 28 pending offerings; on 8 July shareholders holding more than 5% were barred from selling for six months, and SASAC directed more than a hundred central state-owned enterprises to buy and not to sell. On the same day 1,346 of 2,808 A-shares were suspended — nearly half the market. On 9 July a deputy minister of public security arrived at the CSRC in person to hunt for "malicious sellers"; the intraday low was 3,373.54.

The exchange's own formulation in the 2015 chronicle is studiously neutral: "in June to August abnormal fluctuations arose in the country's stock market; the exchange, under CSRC direction, participated with all its strength in the work of maintaining market stability." The term "national team" (国家队) has no legal definition: in practice it means China Securities Finance, Central Huijin, state insurers and asset managers, plus state-owned enterprises acting under SASAC direction.

The circuit breaker (熔断机制) was approved on 4 December 2015 and introduced from 1 January 2016. Its reference was the CSI 300 index rather than the SSE Composite itself; the thresholds were 5% and 7%, symmetrical; at ±5% before 14:45 trading halted for 15 minutes, at ±7% for the rest of the session. On 4 January 2016, its very first day, both thresholds triggered in succession. On 7 January the breaker fired at 09:42 and the market closed for the whole day at around 10:00: actual trading time was 15 minutes — the earliest close in the exchange's history. That evening the exchanges announced suspension of the mechanism from 8 January. It lived for four trading days and has never been restored.

Who runs the exchange

The SSE is a membership legal person exercising self-regulation (自律管理) under CSRC supervision: it writes its own business rules, reviews offering and listing applications, decides on delisting and re-admission, and supervises members, issuers and intermediaries.

Governing bodies: the 14th general meeting of members on 9 November 2024 elected the sixth Board of Governors; the chairman is 邱勇 (Qiu Yong), ranked as a vice-minister, and the general manager is 蔡建春 (Cai Jianchun), in post since June 2020; broker members number around 123. There is a Listing Review Committee (22 members) and a Mergers and Acquisitions Committee (17 members), appointed on 25 April 2025, and a third Sci-Tech Innovation Advisory Committee of 60 people (27 October 2025).

Regulatory continuity here is personal: 吴清 (Wu Qing) was chairman of the SSE from May 2016 to December 2017 — that is, he took over the exchange four months after the circuit breaker failure — and since 2024 has headed the CSRC, personally announcing the creation of the STAR Growth Tier on 18 June 2025. The judicial durability of the exchange's decisions has been tested: on 9 September 2022 a court dismissed a challenge to an SSE delisting decision, a precedent that entrenched the venue's powers.

Regulatory framework: the 2019 Securities Law and the registration reform

The Securities Law of the PRC in force was adopted by the Standing Committee of the National People's Congress on 28 December 2019 and took effect on 1 March 2020; it rewrote the chapter on offerings around the registration system, introduced extraterritoriality and a presumption of fault for intermediaries, and raised penalty ceilings by an order of magnitude and more.

Four substantive shifts

The registration system. Chapter II was rewritten: 注册 (registration) replaced 核准 (approval). Article 24 added a new construction: on discovering non-compliance the CSRC cancels the registration, the issuer returns the offering price with interest at the bank rate, and the controlling shareholder, the actual controller and the sponsor are jointly and severally liable unless they prove absence of fault. Paragraph 2 of the same article for the first time allows the CSRC to require the issuer (or a culpable controlling shareholder) to buy back securities already placed.

Extraterritoriality. Article 2, paragraph 4: offerings and trading outside the PRC that disrupt the order of the domestic market and harm the rights of domestic investors are prosecutable under this Law. Before 2019 no such provision existed at all.

Reversed burden of proof. Article 85: on false disclosure the issuer is liable, and the controlling shareholder, the actual controller, directors, supervisors, senior management, the sponsor and the underwriter are jointly and severally liable with it unless they prove absence of fault. Article 163 extends the same presumption to auditors, lawyers, valuers and rating agencies.

Class action. Article 95, paragraph 3, introduced the special representative action (特别代表人诉讼): an investor protection organisation, given a special mandate by 50 or more investors, registers with the court all rights holders on the depository and clearing organisation's records, except those who expressly opt out. This is an opt-out class action construction: the ordinary representative action under Article 95 works on an opt-in basis, and the automatic registration of every rights holder is what distinguishes the special action.

Penalties: before and after

Sanction ceilings rose by an order of magnitude and more, and for fraudulent issuance the fine was for the first time tied to the amount raised.

The amounts come from the texts of the 2019 edition and the 2014 edition; the State Council General Office issued a separate circular on implementing the new edition on 29 February 2020.

The formula "10–100% of the amount raised" changed the logic of the sanction: its size is now proportional to the size of the issue rather than to the scale of the distortion. In the 思创医惠 case (2024) the CSRC imposed exactly the lower bound — CNY 81.7 million on a convertible bond issue of CNY 817 million; in the 元道通信 case (August 2026) it was CNY 238.84 million on an IPO of CNY 1.169 billion, about 20%. By comparison, Kangmei, which overstated cash by tens of billions, drew the old maximum of CNY 600,000. The distance between those two sanctions is almost four hundredfold, and the statute has not changed since 2019: what changed was the willingness to use its upper ranges.

The registration reform stage by stage

The reform ran for six years and in three waves: a pilot on STAR, extension to ChiNext and the BSE, and market-wide coverage in February 2023.

The division of powers is formulaic: the exchange conducts 审核 — substantive review of disclosure; the CSRC conducts 注册 — registration. The Listing Review Committee sits at the exchange.

Why the reform is called registration with the valve retained

The criticism reduces to four observable facts, each of them fixed in a normative text.

First: CSRC registration remained a substantive barrier. The "New Nine Articles" of April 2024 expressly direct regulators to "compact the exchange's primary responsibility for review", to improve the way the Listing Review Committee is composed and to supervise its members throughout, and to "build a mechanism of retrospective accountability for admission decisions". Second: the pace of offerings remained an object of administrative management — the "827 new policy" of 27 August 2023 is literally titled a "phased tightening of the IPO pace". Third: the fifth STAR criteria set was informally frozen from August 2023 to March 2025 without a single normative instrument saying so. Fourth: on-site inspections as a filter — the March 2024 package raised inspection coverage of applicants to no less than one third.

The outcome: formally, review was delegated to the exchanges; in fact a two-tier system emerged in which the exchange bears "primary responsibility" for the quality of admission and is subject to retrospective accountability, while the regulator manages pace and sector priorities through informal channels. An indicator of the same order: admission thresholds were raised inside the "registration" system, which under a genuine filing regime should not happen at all.

The "New Nine Articles" of April 2024

Document 国发〔2024〕10号 was signed on 4 April and published on 12 April 2024; it is the third "国九条" after the documents of 2004 and 2014, and it sets the market's framework out to 2035.

The document's political formula is supervision "with teeth and spikes" (监管长牙带刺). The nine sections cover: strict control of admission to issuance and listing; strict ongoing supervision of issuers; tighter supervision of delisting; supervision of brokers and funds; supervision of trading, including rules for programme and high-frequency trading; inflow of long-term capital; deepening of reform and opening; the legal base; and collective accountability. Applied innovations: mandatory disclosure of dividend policy at listing, addition of "pre-listing raid dividends stripping the company bare" (突击清仓式分红) to the negative list, the principle of "申报即担责" — liability arises on filing the application, not on listing — and a blacklist of intermediaries.

The figures follow the CSRC press conference of 12.04.2024. The rules on share disposals were rewritten separately: CSRC Order No. 224 requires the "substance over form" principle to be applied against circumvention schemes and directs regulators to compel an offender to buy back unlawfully sold shares and surrender the price difference, while major shareholders and senior management are barred from transacting in derivatives over their own company's stock.

Sponsor and intermediary liability

In the PRC a sponsor answers not for the formal completeness of documents but for the accuracy of disclosure — jointly with the issuer, with a presumption of its own fault, and at the risk of losing its licence.

The framework has four levels. Administrative: Article 182 (disgorgement plus a fine of 1–10× income, suspension or revocation of the sponsorship licence) and Article 213(3) for auditors, lawyers, valuers and rating agencies. Civil: Article 85 (joint liability with the issuer for false disclosure), Article 163 (the duty to check and verify materials) and Article 24 (return of funds where registration is cancelled). Criminal: Article 229 of the Criminal Code, as amended by Amendment XI, expressly brought sponsorship (保荐) within the list of intermediary functions — the intentional issue of false documents is punishable by up to 5 years, and in especially serious circumstances involving documents connected with a securities offering, by 5 to 10 years. Disciplinary: the exchange issues public censures and for up to five years refuses to accept filings from an offender.

To this the CSRC package of 15 March 2024 added two principles: "申报即担责" — withdrawing the application does not release from liability — and "双罚制", simultaneous punishment of the firm and of the specific individuals.

The roster of special representative actions, including 美尚生态, is kept by the China Securities Investor Services Centre.

The volume of enforcement. CSRC figures for 2025 show 701 cases investigated: 200 disclosure cases (down 19.68% year on year), 77 cases involving intermediary firms (down 18.95%), 218 insider dealing cases (up 22.47%), 85 market manipulation cases (up 19.72%), 26 concerning private equity funds and 51 concerning misconduct by industry employees. The regulator reads the fall in disclosure and intermediary cases as the result of an "integrated system for preventing and punishing falsification", and the rise in trading offences as a consequence of higher market activity. In the first half of 2026, penalties for investment banking misconduct hit 国泰海通, 中信建投, 华西证券, 国信证券, 东兴证券, 西部证券 and 国元证券, with 西部证券 sanctioned in seven consecutive months.

Delisting: grounds, statistics, largest cases

Compulsory delisting on the SSE follows four groups of grounds — trading, financial, regulatory and material breach — and after the reform of April 2024 the last group became the main working channel.

Trading grounds (Chapter IX of the Listing Rules): aggregate turnover below 5 million shares over 120 consecutive trading days (1 million for B-shares); a closing price below CNY 1 for 20 consecutive trading days; fewer than 2,000 shareholders for 20 days running; capitalisation below CNY 300 million for 20 days running. Financial grounds: negative net profit with revenue below CNY 100 million; negative net assets at year-end; a disclaimer or adverse audit opinion — two consecutive years on any one of these ends the listing. The calculation takes the lower of profit before and after non-recurring items, and revenue excludes income unrelated to the core business or lacking commercial substance.

Material breach means fraudulent issuance established by a CSRC administrative decision or a court judgment, and misstatement of accounts above threshold amounts. It is precisely these thresholds that the reform of 12 April 2024 rewrote in full: it added the grounds of "one year of grave falsification" and "multi-year continuous falsification", tightened the regulatory grounds (multi-year non-standard internal control opinions, prolonged disorderly fights for control, large-scale misappropriation of funds by a major shareholder with refusal to remedy), equated reverse takeovers to IPOs, and made a cash exit right (现金选择权) mandatory for dissenting shareholders on a voluntary delisting.

Procedurally, after a delisting decision the stock passes through a settlement period (退市整理期): it begins on the trading day after the fifth day from the announcement date, lasts 15 trading days, and the indicator "退市" is added to the short name. The shares then move into the 退市板块 segment of the NEEQ system, where their onward transfer is organised.

Across the whole history of the SSE there have been 153 delistings (from the exchange register at 4 September 2026). A year-by-year national series for 2019–2022 and 2024–2025 is not published officially.

Illustrative cases. *ST博元 (600656) was the first company in PRC market history removed from quotation for a material disclosure breach (announcement 21.03.2016, delisting 13.05.2016). 紫晶存储 (688086) and 泽达易盛 (688555) were delisted on 7 July 2023 — the first compulsory delistings on STAR, for fraudulent issuance; 观典防务 (688287) followed on 10 June 2026 as the third case on that board.

*ST康佳 (Konka) was the largest voluntary exit of 2026: the former "king of televisions", listed since 1992, saw revenue fall from CNY 55.1 billion (2019) to under CNY 10 billion (2025), accumulated losses of about CNY 20 billion over 2022–2025 and net assets of minus CNY 6.08 billion at the end of 2025; rather than wait for compulsory delisting the board put a voluntary exit to the shareholders' meeting with a cash exit right of CNY 2.48 per A-share.

元道通信 in September 2026 combined fraudulent issuance with delisting: revenue for 2019–2022 was overstated by roughly CNY 656 million, the IPO raised CNY 1.169 billion against a stated CNY 843 million, the fine was CNY 238.84 million, and the share price stood at CNY 3.31 against CNY 38.46 at the offering.

The delisting risk profile has changed in kind. In 2023 the dominant trigger was the price one — a fall below the CNY 1 par value — which was observable in real time and allowed an exit in advance. In January to August 2026 there was not a single such case: what fired were 13 financial and 4 regulatory grounds. The signal has moved out of the quote and into the annual accounts and the CSRC decision, which means it surfaces with a lag of several months, and the market price has stopped being an early indicator.

Enforcement: accounting fraud and investor protection

There is exactly one benchmark accounting fraud case on the SSE — Kangmei Pharmaceutical — and it is the case that tied the administrative, criminal and civil lines of liability together.

Kangmei Pharmaceutical (600518)

The company listed on the SSE in March 2001; its auditor, 广东正中珠江, signed its accounts for nineteen consecutive years. By 2015 it had become the first pharmaceutical company on the A-share market with a capitalisation above CNY 100 billion. The first exposé came as early as December 2012, but the company denied everything; the break came with an analysts' publication in October 2018 on the mismatch between enormous cash balances and heavy borrowing — four consecutive sessions at the lower limit, and that same evening the CSRC set up an inspection team.

On 29 April 2019 the company itself "corrected prior-period errors": 2017 revenue overstated by CNY 8.898 billion, cash overstated by CNY 29.9 billion. The CSRC investigation established systematic, deliberate and organised multi-year falsification: forged bank documents to inflate deposits, forged operating documents to inflate revenue, and the transfer of part of the funds to accounts of related parties to buy the company's own shares. The cumulative scale was an overstatement of cash of roughly CNY 88.7 billion, of revenue by CNY 29 billion and of profit by CNY 4.1 billion. The primary sources for the case are the CSRC statement on the judgment in the first special representative action of 12.11.2021 and the 投服中心 case materials on Kangmei; the particulars of the administrative decision of 14.05.2020, the Foshan criminal judgment and the 2026 recourse judgments are given per the Chinese Wikipedia account of the case.

The industry consequences were larger than the sanction. The auditor's client base collapsed: 106 A-share issuers in 2018 → 46 after the exposé → 2 in 2020 → 0 in 2021, and the licence was revoked on 21 July 2022. In March 2021 436 A-share companies announced a change of auditor for the 2020 year. After the ruling on joint liability of independent directors, 18 issuers disclosed their resignations in the week from 12 to 19 November 2021 — an episode that entered market vocabulary as the "wave of independent director resignations".

Two cases that do not belong to Shanghai

Kangde Xin (康得新, 002450) traded on the Shenzhen Stock Exchange, not the SSE. A default on commercial paper in January 2019 exposed profit overstated by CNY 11.9 billion across four consecutive years — a record on the A-share market for that metric. The key episode: CNY 12.2 billion of "deposits" at Bank of Beijing which, according to the CSRC statement of 12 March 2021, were in fact used to secure the return of fictitious revenue.

Luckin Coffee was never listed in Shanghai: its IPO was on Nasdaq. The company admitted fabricating revenue of ~CNY 2.2 billion on 2 April 2020, was delisted on 29 June 2020, settled with the US SEC for $180 million and with an investor class action for $187.5 million. In the PRC it paid roughly $8.98 million — under unfair competition and advertising law, not under the Securities Law. That gap is exactly what Article 2(4) of the new edition of the Law is meant to close, but it does not close it entirely: extraterritoriality is conditioned on harm to domestic investors, and where the injured parties trade on an American exchange there is no jurisdictional hook. Hence the policy emphasis of 2023–2024 on controlling the entry — the filing regime for overseas listings — rather than the exit through sanction.

Criminal liability after Amendment XI

Amendment XI to the Criminal Code was adopted on 26 December 2020 and took effect on 1 March 2021; it removed the upper bounds on penalties for the "market" offences and for the first time named the controlling shareholder as a subject.

Under Article 160 (fraudulent issuance), in especially serious circumstances the upper bound is removed — sentencing runs above five years under the general rules — and a controlling shareholder or actual controller who organised or incited the offence is liable on the same footing and receives a fine of 20% to 100% of the funds unlawfully raised. Under Article 161 (unlawful disclosure or non-disclosure of material information), especially serious circumstances draw 5 to 10 years, the fine ceiling is removed, and the controlling shareholder is liable including for concealment. Article 182 (market manipulation) gained modern methods: spoofing (frequent or bulk entry and cancellation of orders) and "抢帽子" — a public recommendation combined with a simultaneous opposite trade. A recent application: a blogger who published more than a hundred recommendation posts on 32 stocks between September 2024 and April 2025, with turnover of CNY 6.35 billion and unlawful profit above CNY 40 million, received over CNY 83 million in disgorgement and fines plus a three-year ban from the market.

Aggregate CSRC sanction statistics. For 2021–2023 there were 397 cases of issuer disclosure breaches, 203 of them involving falsification; more than 150 cases have been referred to the public security organs since 2021. In 2023 alone there were over 350 administrative penalties, more than 1,000 individuals punished and fines above CNY 6 billion. From the start of the registration reform to January 2024, roughly 1,900 cases were investigated and about 600 referred to the police. The comprehensive anti-fraud policy is set out in the opinion of six agencies dated 5 July 2024, aimed at fictitious transactions, manipulation through supply-chain finance, abuse of accounting policy and organised "falsification groups".

Investor protection: who recovers, and how

The central actor is the China Securities Investor Services Centre (中证中小投资者服务中心, the securities investor services centre, 投服中心), a CSRC-affiliated body that holds minimum stakes in practically every listed company and uses shareholder rights systematically.

It works along four lines: exercising shareholder rights (public nomination of independent directors, proxy solicitation), support actions under Article 94(2), ordinary and special representative actions under Article 95, and mediation. In addition, Article 94(3) gives the Centre the right to bring a derivative action in the company's interest without the shareholding and holding-period limits that the Company Law otherwise imposes.

This is the complete list of special representative actions as at September 2026 (the 投服中心 register) — five cases in the six years the mechanism has existed. That is precisely why the CSRC opinion on minority investor protection of 27 October 2025 sets the task of "building a mechanism for normalising the special representative action", and alongside it the interpretation of standard terms in favour of the minority, a "model judgment plus batch mediation" mechanism, mandatory disclosure of minority protection measures in the prospectus, and pressure on controlling shareholders to compensate before delisting occurs.

The parallel circuit is the Securities Investor Protection Fund (SIPF) and the advance compensation mechanism (先行赔付) under Article 93 of the Law. Across its whole history there have been five instances: 万福生科 and 海联讯 (January 2016), 欣泰电气 (June 2017), 紫晶存储 (May 2023) and 广道数字 (December 2025). Across the two 2023 cases, investors in 紫晶存储 and 泽达易盛 received more than CNY 1.3 billion in total.

The practical lesson from those five cases: the special representative action is more often satisfied inside a bankruptcy reorganisation than through ordinary enforcement, and it enjoys no priority over other creditors. A retail investor with a claim up to CNY 250,000 in the 金通灵 case is almost fully protected; a large one receives paper in the restructured company and trust interests.

IPO pauses and "window guidance"

Suspending primary offerings is a historically durable instrument of the Chinese regulator, but today it operates not through an announced pause but through management of pace and sector selection.

Market convention counts nine complete halts to A-share offerings between 1994 and 2015 (1994; twice in 1995; 2001; 2004; 2005–2006; 2008–2009; 2012–2013; 2015). That list relates to the national flow of CSRC approvals and is not accompanied by primary confirmation — it should be cited as accepted market chronology, no more. The Shanghai-specific pause profile, by contrast, can be derived precisely from the SSE listing register: it is the set of intervals between consecutive listing dates longer than a hundred days.

From the SSE listing register. Note two things: the longest Shanghai pause is not 2015 but 2012–2013, and the 1994–1995 suspensions barely register in Shanghai at all (the largest gap in those years is 81 days), meaning they hit Shenzhen harder.

The 23× P/E rule is not in force. The informal cap on the offering price was lifted on STAR in 2019, on ChiNext in 2020, and with the introduction of the market-wide registration system in 2023 it was abolished on the main board too; on every board the price is now set by institutional inquiry (询价). But window guidance as a method has not disappeared — it has changed its object. The "827 new policy" of 27 August 2023 expressly introduced a "phased tightening of the IPO pace"; the new "Nine Articles" instruct regulators to "root out market anomalies of the type of inflated pricing with over-raising and collusive under-pricing", meaning the regulator reserves judgment on both an excessive and an insufficient price; on-site inspections cover no less than a third of applicants; and the fifth STAR criteria set was frozen for two years without a normative act.

An illustration of how this looks in practice: in August 2026 the market reacted to a rumour that IPOs would be closed entirely to loss-making companies, which had to be denied through "persons familiar with the matter" rather than through a published document. The official line is framed as "we are not blocking, we are raising quality": the door remains open to high-quality loss-making companies, but review scrutinises the commercialisation path and the expectation of improving results. Separately, on 23 February 2024 the CSRC publicly denied reports of a "ten-year retrospective" review of IPOs: no such arrangement exists, though all companies remain under continuous strict supervision.

Infrastructure: ChinaClear and the settlement circuit

Clearing, settlement and custody for every security on the SSE are handled not by the exchange but by China Securities Depository and Clearing Corporation (中国结算, ChinaClear / CSDC) — a nationwide central organisation owned in equal halves by the SSE and the SZSE.

ChinaClear was established on 30 March 2001 with State Council consent and CSRC permission; from 1 October 2001 it took over all the registration and settlement functions previously carried by the exchanges themselves. Registered capital is CNY 20 billion, and the shareholders are the SSE and the SZSE at 50% each. The organisation combines three roles: central counterparty (CCP) with multilateral netting and a settlement guarantee, central securities depository (CSD) and securities settlement system (SSS). Its perimeter covers securities of the SSE, SZSE, BSE and NEEQ, clearing of exchange-traded options, the onshore leg of Stock Connect, open-end funds and asset management products, settlement of China Securities Finance operations and physical delivery on CFFEX treasury bond futures.

The settlement model has two tiers: the first between ChinaClear and clearing participants, the second between participants and their clients. ChinaClear acts as central counterparty not in every regime: guaranteed multilateral netting applies to A-shares, government bonds, part of the corporate bond market, closed-end funds, collateralised bond repo and ETF unit trading, while transfers of privately placed bonds, negotiated repo, conversion of exchangeable bonds and a range of ETF operations run on non-guaranteed gross settlement, where ChinaClear does not become the counterparty and does not guarantee settlement. The general principle is DVP: securities are delivered if and only if cash is paid, and a participant that has not provided sufficient cash or securities receives no counter-delivery. There is no publicly disclosed "default waterfall" — the structure of the guarantee fund and the order in which resources are used — in the English-language materials of either the exchange or the depository.

The base holding model in the PRC is direct registration in the names of beneficial owners, and this is the key difference from Anglo-Saxon practice. Nominee holding is permitted only as an exception, where provided by statute, administrative act or the CSRC, and ChinaClear may require a nominee holder to disclose information about the beneficiaries; this is precisely the regime under which Stock Connect (with HKSCC as nominee) and QFII/RQFII operate (nominee holding and beneficiaries). An exchange trading investor must appoint a single broker through the designated trading (指定交易) procedure and trade only through that broker; the rule does not apply to overseas holders of B-shares.

ChinaClear is often confused with the Shanghai Clearing House (银行间市场清算所), but they are different organisations on different markets: the clearing house was created on 28 November 2009, is recognised by the People's Bank of China as a qualified central counterparty and serves the interbank and over-the-counter market as the national registration and settlement centre for corporate credit bonds. It has nothing to do with SSE exchange trading. A separate subsidiary of the exchange, SSE INFONET (上证所信息网络有限公司), operates the commercial distribution of market data and the issuer disclosure service.

Trading microstructure: limits, T+1, lots, margin

SSE mechanics are set by the Trading Rules in their 2026 edition and rest on three constraints: the price limit, the prohibition on selling what has been bought before settlement, and tight order-entry corridors.

Sessions, limits and halts

The trading day: opening auction 9:15–9:25, continuous trading 9:30–11:30 and 13:00–14:57, closing auction 14:57–15:00, block trades 15:00–15:30. STAR adds a closing-price after-hours session at 15:05–15:30 that the main board does not have. Bonds, repo and funds have no closing auction at all. The closing price is formed by auction; if none is held, the volume-weighted price of the last minute of trading is used.

The parameters follow the SSE Trading Rules, 2026 edition, Articles 3.3.8–3.3.18, 4.2.4–4.2.5 and 6.6–6.8. The exchange's own English explanatory page contradicts that text: it still states that on the main board the limit is disapplied only on the first day after an IPO, and it quotes a 5% limit for risk-alerted securities that does not exist in the rules in force. As with the admission thresholds, the SSE's English explanatory material cannot be used for due diligence without reconciliation against the rulebook.

One feature of the temporary halt deserves attention: during the ten-minute pause orders may be entered and cancelled, but the virtual reference price, virtual matched volume and virtual imbalance are not published — the market trades blind, and on resumption an auction runs over the whole accumulated pool. That makes the ±30/±60% mechanism materially harsher than a conventional volatility interruption with a transparent indicative auction. Risk-alerted (ST) securities carry their own restrictions: limit orders only, and aggregate daily buying by a single investor of no more than 500,000 shares across all channels, counting the ordinary and the margin account together.

The T+1 rule is drafted not as a settlement period but as a prohibition: "securities bought may not be sold before settlement." Intraday turnover is permitted for a closed list — bond, money market, gold, commodity and cross-border ETFs, cross-border LOFs and warrants, that is, only instruments carrying no single-issuer risk. B-shares operate on "turnover from the next day". By the generally accepted dating, T+1 was introduced for A-shares on 1 January 1995 after a T+0 period in 1992–1995 that was abandoned because of manipulation.

Block trades require at least 300,000 shares or CNY 2 million; trades confirmed between 9:30 and 15:30 settle the same day, those confirmed between 16:00 and 17:00 on the next trading day. Block volume on the SSE in 2024 was CNY 206.8 billion across 12,661 trades, down by a third year on year.

A separate layer of rules governs programme trading: Article 3.1.8 of the Rules requires compliance with CSRC rules and reporting to the exchange; draft implementing rules were published on 7 June 2024, the rules in force were adopted on 3 April 2025, and for Northbound Stock Connect investors a separate reporting guideline has applied since 12 January 2026 (see the section on access channels).

Margin trading and short selling

The margin business (margin trading and short selling, 融资融券) on the SSE runs through a closed list of eligible securities, differentiated collateral haircuts and per-security concentration limits.

A stock enters the list if it has been listed for more than three months, has issued capital of at least 100 million shares or free float of at least CNY 500 million (for short selling, 200 million shares or CNY 800 million), has no fewer than 4,000 shareholders and shows no liquidity or volatility anomalies over the preceding three months; IPOs under the registration system are admitted from the first day of listing. An ST designation automatically removes a stock from the list.

The actual size of the list at 3 September 2026 was 2,000 securities, comprising 1,072 main board shares, 602 STAR shares and 325 funds. In relative terms that is 63% of the main board and 98% of STAR: the technology board is admitted to leverage almost in its entirety. The collateral conversion ratio (折算率) is differentiated: no more than 70% of value for SSE 180 constituents, 65% for other A-shares, 90% for ETFs, 95% for government bonds and money market funds, and 0% for ST securities and securities in the process of delisting — the latter do not count as collateral at all. The concentration limit: once the "margin control indicator" for an individual share reaches 25%, the exchange may suspend margin buying in it; for an individual ETF the threshold is 75%.

From the SSE daily summaries "融资融券交易汇总". Amounts are in renminbi. Margin debt on the SSE broke the 2015 bubble record in nominal terms in June 2026, but structurally this is a different market: the ratio of debt to free float at 3 September 2026 is 2.21%, whereas in 2015 the debt occupied a multiple of that share of the then free float.

Refinancing of the margin business is handled by China Securities Finance Corporation (the refinancing facility, 转融通) — a company established on 8 October 2011 by State Council decision with registered capital of CNY 7.5 billion; its founders are the SSE, the SZSE and ChinaClear. On 14 February 2025 CSF announced the transfer of 66.7% of its shares to 中央汇金 (Central Huijin), which brings the instrument for refinancing leverage and the instrument for state intervention under one roof.

Short selling on the SSE has been switched off in practice since mid-2024. Exactly one measure was officially announced: on 28 January 2024 the exchange suspended the lending of shares received by strategic investors in an offering during their promised holding period. The result is visible in the data: the short position balance fell from CNY 108.4 billion (September 2021) to CNY 6.5 billion (September 2024) — down 94% — and China Securities Finance stopped publishing 转融通 data altogether: the daily and monthly statistics sections of its website are empty. The measures the press attributes to July 2024 — a complete suspension of securities lending and margin requirements raised to 100% and 120% — have no official confirmation. By September 2026 shorts had recovered only to CNY 18.6 billion, that is, to 17% of the peak.

Instruments on the SSE

The Shanghai exchange is not an equity market but a multi-product venue, where the main cash flow comes from repo and where equity turnover is less than half that of the exchange's own bond repo segment.

The source is the SSE market API "每日概况" and the exchange's market statistics page, data as at 4 September 2026. Two ratios set the correct optics on this market: repo generates 2.6 times more turnover than all equities together, and ETFs already amount to 39.7% of equity turnover.

B-shares are a dying segment rather than a segment. 41 lines, average daily turnover per line of CNY 3.88 million, a 0.017% share of SSE equity turnover. Across the whole of 2024, 6,200 new B-share accounts were opened against 25 million A-share accounts. For a holder of foreign capital the segment offers nothing beyond a historical curiosity: China's first B-share (600602) was listed in February 1992, trading was opened to residents with foreign currency deposits in February 2001, and the effect was one-off — the number of individual accounts rose from 137,000 at the end of 2000 to 920,000 at the end of 2001, after which the figure has stagnated for twenty years.

Bonds. 37,564 issues worth CNY 21.18 trillion, of which 14,626 are government bonds and 22,938 credit bonds. The segment's chronology: collateralised repo from 1993, the first convertible bond in 1997, the first ABS and the Fixed Income platform in 2005, private placements from 2012, municipal bonds and the green pilot in 2016, the first Belt and Road panda bond in 2017, credit protection instruments in 2019, REITs in 2021, and a separate bond trading system from December 2021. Bond lending launched on 25 November 2023 and grew 11.6-fold in its first full year, from CNY 28.4 billion to CNY 328.5 billion. Securities held in custody at the SSE at the end of 2024 amounted to CNY 17.58 trillion.

ETFs are the fastest-growing part of the market. 926 funds and CNY 3.31 trillion of assets against 607 funds at the end of 2024; annual turnover rose from CNY 18.70 trillion (2022) to CNY 29.71 trillion (2024), and the ratio of ETF turnover to equity turnover from 19.4% to 39.7%. Daily ETF turnover against assets is 11.28%, against 1.53% for equities. STAR ETFs are a story of their own: assets exceeded CNY 364 billion at the end of August 2026 (up about 20% year on year), net inflows into STAR 50 index products since July 2026 came to CNY 68 billion, and the largest fund passed CNY 87 billion. For a foreign portfolio holder this matters: the fund wrapper is often the only way to gain exposure to securities that are not directly accessible (investment platforms and wrappers).

ETF options come in five classes: SSE 50ETF from February 2015, CSI 300ETF from December 2019, CSI 500ETF from September 2022 and two STAR 50 funds from June 2023. 2025 volume was 1.275 billion contracts on a notional of CNY 47.06 trillion with premium of CNY 732.3 billion; average daily open interest was 6.41 million contracts. The participant breakdown is a rare published cut on institutionalisation: individuals account for 31.70% of volume, institutions for 68.30%, and market making accounts for 43.2% of two-sided turnover. There are no STAR 50 index futures on the SSE: in the "Eight measures for deepening STAR reform" of 19 June 2024 the CSRC recorded an intention to study their launch, and they fall within the CFFEX remit.

REITs. The pilot launched in 2021 with the first batch listed on 21 June 2021; by 4 September 2026 61 funds trade on the SSE with capitalisation of CNY 164.7 billion. The structure: more than 80% of fund assets sit in real estate ABS, the form is closed-end, and distribution of no less than 90% of the annual distributable amount is mandatory. Category expansion: the first two consumer infrastructure REITs on 12 March 2024; CapitaLand Commercial REIT on 29 September 2025, the first consumer REIT with foreign participation; the first commercial real estate REITs on 18 June 2026. Liquidity remains low: daily turnover of 0.26% of free float, and average turnover per fund of CNY 3.7 million a day.

Indices and the critique of the SSE Composite methodology

The exchange's flagship index is the SSE Composite (上证综指, code 000001), computed from a base of 19 December 1990 = 100 and published since 15 July 1991; it covers all A- and B-shares on the exchange and is weighted by total, not free-float, capitalisation.

The SSE index series is developed jointly by the exchange and China Securities Index Co. (中证指数有限公司), a joint venture of the SSE and the SZSE. Launch dates follow the index section of the SSE website and the yearbook chronicles.

Criticism of the composite's methodology comes down to four points, three of which the exchange concedes in its own documents. First, weighting by total capitalisation: with average free float of 88.7% across the whole exchange but only 64.8% on STAR (CNY 10.70 trillion of 16.52 trillion at 4 September 2026), the index gives locked state stakes and founder blocks a weight the market cannot access. Second, it is a price index, not a total return index: the yearbook states plainly that "on the ex-dividend date the index is not adjusted, but naturally drops". Third, the inclusion of every security, including those under risk alert. Fourth, new-listing bias, since new stocks enter the index at inflated first prices. It is telling how the exchange solved the dividend problem: instead of changing the composite's methodology, on 29 July 2024 it launched a separate total return index.

The gap between two official metrics for the same board illustrates the same problem. At 4 September 2026 the exchange's average P/E for the STAR board is 118.78, while the P/E of the STAR 50 index is 71.28: loss-making and marginally profitable companies enter the exchange denominator but not the index of the fifty largest. The "1+6" reform institutionalised that effect by marking loss-making issuers with a "U" and a separate Growth Tier — the exchange has begun to separate their accounting explicitly rather than average it away.

Investor base and liquidity

The dominant holder of the Shanghai market is neither retail nor funds but non-financial legal persons: state holding companies and parent companies control 57.22% of capitalisation while holding 0.12% of all accounts.

The data come from the SSE Statistical Yearbook, 2025 volume (figures at the end of 2024) and the 2019 volume (at the end of 2018). The six-year shift runs against intuition: the retail share of ownership rose by 2.78 percentage points and the professional institutional share by 6.46 points, while institutionalisation came at the expense of the non-financial legal person share (down 7.33 points) rather than by displacing retail. Retail ownership is nonetheless highly concentrated: at the end of 2018 — the only year with a published breakdown — 0.42% of retail accounts (portfolios above CNY 10 million, 162,900 people) held 6.63% of the entire market, while the mass segment of 58.21% of accounts with portfolios below CNY 100,000 held just 1.25%.

Accounts. At the end of 2024 there were 389.4 million accounts open on the SSE, of which 370.0 million were A-share accounts, 1.71 million B-share accounts and 7.165 million margin accounts. During 2024, 27.7 million new accounts were opened, and the monthly pattern shows the policy effect literally: 1.134 million in August — the year's low — against 7.394 million in October, 6.5 times as many. An important caveat: these are SSE accounts, not unique investors nationwide — the national count is kept by ChinaClear.

The retail share of turnover is a figure the exchange has stopped publishing. The table "年度各类投资者买卖净额情况", with the trading share indicator, appears in the yearbooks for 2015 (86.91%), 2016 (85.62%) and 2017 (82.01%) and disappears from the 2019 volume onwards — exactly when the figure began to fall. The widely circulated estimates that "retail accounts for 60–70% of A-share turnover" are not SSE data: the last figure the exchange published relates to 2017. Indirect primary indicators point to a retail character of trading: the average trade size in 2024 was CNY 11,603 (CNY 18,567 on STAR) across 9.3 billion trades in the year. But where a breakdown is published — in the options market — the picture is the opposite of the received wisdom: individuals account for only 31.70% of volume.

The "national team" has been consolidated since February 2025, with China Securities Finance passing 66.7% to Central Huijin. A parallel instrument is the mobilisation of institutions: on 15 May 2024 the SSE issued an "Initiative on rational, value-based and long-term investment", and on 19 July 2024 published a list of 315 acceding organisations, covering bank wealth management arms, pension and insurance companies, brokers, public and private funds and the National Council for Social Security Fund. The exchange does not publish the insurers' ownership share, disclosing only the "professional institutions" aggregate.

Foreigners hold 2.50% of SSE capitalisation through Northbound Stock Connect — CNY 1.308 trillion at the end of 2024, against 1.91% at the end of 2018. 沪股通 turnover for 2024 was CNY 17.3 trillion; cumulative Northbound turnover over the mechanism's ten years reached CNY 70 trillion by November 2024. Dividing Connect turnover directly by exchange turnover gives 16%, but the Connect statistics appear to sum purchases and sales while exchange turnover is counted one-sided: the comparable share is about 8%.

Turnover velocity is this market's defining feature. The whole main board changes hands roughly 2.1 times a year and STAR 3.0 times — the average share is held for less than six months. The time gap is starker still: average daily equity turnover rose from CNY 541.5 billion in 2015 — at the height of the bubble, with the index at 5,178 — to CNY 1,181.4 billion over the first eight months of 2026, with the index at 3,930, a quarter lower. Liquidity and the price level on this market have decoupled.

Turnover concentration is not extreme and there are practically no "dead" stocks. From the SSE Statistical Yearbook for 2024 (2,334 securities): the top 10 names give only 7.92% of annual turnover, the top 100 32.16%, the top 300 53.09%, and the bottom half of the list 12.92% — more than the top ten. The median SSE stock traded CNY 22.81 billion over the year (about CNY 94 million a day) and turned over 331% of its share capital; only 36 securities (1.5%) had velocity below 50% a year. The real illiquidity sits not in equities but in other segments: B-shares (CNY 3.9 million a day per line), REITs (CNY 3.7 million), LOFs (CNY 4.4 million) and above all the 22,938 credit bonds (CNY 3.3 million per issue).

On the World Federation of Exchanges rankings the SSE stood third in the world by capitalisation in 2024, fourth by capital raised and fifth by total turnover.

The SSE bond route

The SSE exchange debt market is one of the largest in the world — around CNY 4.5 trillion issued in 2025 — but for a non-resident it is closed by statistics rather than by law.

The SSE bond market includes corporate bonds, ABS, green bonds, REITs and Belt and Road panda bonds (SSE market overview). Corporate bond and ABS issuance and listing procedures, including green and sci-tech innovation bond identification, follow the SSE guide revised on 19 December 2025; REIT issuance and listing follows a separate guide revised on 10 June 2026. The fork with the interbank market matters: on the exchange the SSE reviews and the CSRC registers, while on the CIBM the PBoC and NAFMII govern; exchange requirements are the stricter of the two, since average distributable profit over three years must cover annual interest. A separate growing segment is sci-tech innovation bonds: SSE issuance of these exceeded CNY 500 billion in 2024 alone, and by May 2025 more than 500 companies had placed roughly CNY 1.76 trillion of such paper.

The honest conclusion: the exchange panda route is practically dead for a non-resident — the interbank market accounted for 99.3% of 2026 panda bond issuance (S&P Global China Ratings, 13.08.2026, PDF).

The exchange channel acquired rules of its own on 2 March 2018, when the SSE and the SZSE each issued the Notice on the Pilot Programme for Belt and Road Bonds (《关于开展“一带一路”债券试点的通知》), admitting foreign sovereign issuers to the exchange market for the first time; at the CSRC briefing the same day the regulator gave the scale of the channel: seven issuers had obtained CSRC approval or exchange no-objection letters for a declared CNY 50 billion, and four of them had actually placed CNY 3.5 billion (Zhong Lun).

The most visible exchange precedent is RUSAL, the first Russian panda bond issuer and the first issuer from a Belt and Road country. The SSE no-objection letter for a non-public programme of up to CNY 10 billion came in January 2017; the debut tranche of CNY 1 billion was placed in March 2017 (three years with a put at the end of the second, a 5.5% coupon, an AAA issue rating and CICC as sole underwriter), and a second tranche of CNY 500 million followed in September 2017, so CNY 1.5 billion of the ten-billion programme was drawn (SSE press release, CSRC briefing of 17.03.2017, RUSAL 2017 annual report, p. 299).

The deal is absent from the NAFMII registries by construction: it ran through the exchange segment (CSRC/SSE) rather than the interbank one (NAFMII/PBoC), and the two circuits keep separate records.

The debt domain in full sits in the article on panda bonds; the price of money in the PRC is covered in lending in China.

Foreign investor access channels

For a buyer of Chinese securities the market is far more open than for an issuer: there are two working portfolio entrances — the exchange-based Stock Connect and the institutional QFII/RQFII — plus the Bond Connect debt circuit and a separate legal regime for strategic investment.

QFII/RQFII: from the 2002 quotas to the QFI regime

The qualified foreign institutional investor regime has been in force since November 2002 and, after the 2020 reform, has turned from a quota system into a licence granting access to what Stock Connect cannot do.

Post-reform applicant requirements are qualitative, with no quantitative asset or track record thresholds: sound financial condition, investment experience, qualified personnel, internal controls and no major regulatory sanctions in the last three years. The cap on the number of custodians has been removed; with more than two custodians one is designated as the principal reporting custodian and must keep records for no less than 20 years (QFII/RQFII rules on the SSE site; on safekeeping, see securities custody). The last publicly known count of status holders is 757 institutions as at February 2023; since the quotas were abolished neither the CSRC nor SAFE has published a current register or aggregate QFI assets in the English-language perimeter.

The practical purpose of QFI has changed: for buying liquid A-shares it is redundant, since Stock Connect requires no licence, no resident custodian and no reporting. QFI is needed where Connect physically does not work — the primary market (IPOs, follow-ons, bond and ABS offerings), the NEEQ, private funds, CFFEX financial futures, commodity derivatives, repo, margin trading and securities lending.

Stock Connect: quotas, perimeter, STAR and ETFs

Stock Connect is a mutual access mechanism in which an investor trades through their home exchange and their home broker without becoming a participant in the other market.

The mechanism was announced by Premier Li Keqiang on 10 April 2014 and launched on 17 November 2014; the Shenzhen leg was added on 5 December 2016. The model chosen solved a currency problem rather than an exchange one: the loop is closed, funds return to bank accounts on the home market and cannot be used for other asset classes. That allowed the PRC to open its equity market without opening the capital account — which is why a foreigner needs no licence, no quota and no resident custodian.

The daily quota caps net buying: only buy orders are controlled, selling is always allowed regardless of the balance; an unused balance does not carry into the next day, and if it is exhausted during the session no new buy orders are accepted for the rest of the day, though orders already accepted remain valid (SSE on quotas). For a private portfolio the quota is not the binding constraint — the eligible list and the investor's status are.

The Northbound perimeter is not the whole SSE but an eligible list: constituents of the SSE A Share Index with a six-month daily average capitalisation of ≥ CNY 5 billion and turnover of ≥ CNY 30 million, with trading suspended in fewer than half the sessions over the half-year, plus A-shares of companies with paired H-share listings in Hong Kong; risk-alerted securities are excluded (SSE on eligibility). Removal from the list is not a freeze but a switch to sell-only status (Special China Connect Securities): buying is blocked while selling always remains — if the six-month daily average capitalisation falls below CNY 4 billion or daily average turnover below CNY 20 million, if trading was suspended on half the sessions or more, if the stock is placed under risk alert, if it ceases to be a constituent of the SSE A Share Index, or if delisting grounds arise. The SSE eligibility page carries none of these exit thresholds — they are set out in the HKEX Stock Connect FAQ, PDF.

How the perimeter evolved: ChiNext was added on 5 December 2016 for institutional professional investors only; STAR Market from February 2021 on the same condition; ETF Connect launched on 4 July 2022 and was expanded on 22 July 2024; in March 2023 the equity perimeter widened from the SSE 180/380 indices to the whole SSE A Share Index. Public REITs are not included in the mechanism and, as at September 2026, remain an announced but unimplemented workstream. ETF criteria: average assets over six months ≥ CNY 500 million, listed for at least 6 months, the underlying index published for at least a year, and no less than 60% of the weight in Connect-eligible securities.

The constraint usually lost in summaries: without institutional professional investor status the SSE technology board is closed to a non-resident, and without that qualification a private holder is left with the main board and fund wrappers.

Northbound fees: an exchange charge of 0.00341% per side, a CSRC levy of 0.002%, a ChinaClear transfer fee of 0.001%, an HKSCC fee of 0.002% and stamp duty of 0.05% on the seller; ETFs pay no stamp duty (HKEX, Stock Connect Information Book for Investors, section 7, PDF — as at September 2026 the English SSE settlement page still shows an outdated 0.1% and 0.00487%, so for Connect the HKEX documents are the safer reference). Volumes are growing fast, but they can only be compared if the base is stated: average daily Northbound turnover for January–October 2024 was CNY 136.3 billion, about 7.3% of mainland exchange turnover (HKEX, 18.11.2024); for the first half of 2026 it was CNY 345.3 billion; and for August 2026 alone CNY 300.03 billion (HKEX Monthly Market Highlights). The three figures cover a ten-month, a half-year and a single-month period and do not form a series.

The Northbound circuit has also become a supervision channel. The investor identifier (BCAN/CID) is passed from the Hong Kong side to the mainland exchanges "for supervision and investigation purposes"; mainland investors have been barred from the Northbound leg since 24 July 2023; and since 12 January 2026 programme trading reporting is mandatory — disclosing the amounts and sources of funds, the level of leverage, strategy types, maximum order frequency, and the name, version and developer of the trading software, and for high-frequency trading also server locations and contingency plans. On 17 July 2026 HKEX signed a memorandum with the SSE and SZSE on the voluntary transfer of proprietary traders' trading information.

Which channel is open to whom

A private individual based outside China has one channel only — Stock Connect Northbound, through an account with a Hong Kong broker.

A mainland account is not available to a non-resident. Direct access to A-shares belongs to holders of permanent residence, to foreigners working in the PRC and to participants in listed companies' share incentive plans, the latter two categories added by CSRC Order No. 147 of 15.08.2018, in force from 15 September 2018 (CSRC); a private investor living abroad is not on that list and buys A-shares only through an offshore broker with Northbound access.

Strategic investment is a separate legal regime that does not intersect with the portfolio one. The Measures effective 2 December 2024 cut the asset threshold to $50 million of own assets or $300 million under management (for a controlling shareholder, $100 million or $500 million), removed the minimum stake for a private placement and cut it to 5% for a negotiated transfer or a tender offer, shortened the lock-up from three years to 12 months, allowed payment in non-tradable overseas shares and, for the first time, opened the regime to foreign individuals (MOFCOM). Sector rules can be tougher: for commercial banks the lock-up is five years. Transactions through QFII/RQFII and Stock Connect fall outside these rules, and moving between the circuits without re-papering is not possible.

What the investor holds: the nominee chain

Through Stock Connect an investor receives not an entry in the issuer's register but a beneficial interest in a security whose title is held by a Hong Kong nominee.

A share bought through Connect sits in HKSCC's omnibus account with ChinaClear: the issuer's register shows the nominee holder, not the investor. Beneficial interest is recognised as the investor's, but it is exercised along the chain "broker — CCASS participant — HKSCC": the CCASS participant collects the votes and HKSCC submits a single combined instruction to the issuer. This is where the holder's risk sits — infrastructural rather than market risk: the rights are handled by the nominee holder, and the terms are set by the CSRC provisions on mutual market access (Order No. 128, in force from 30.09.2016). Institutions can use the Special Segregated Account model: the securities stay with the custodian, pre-trade checking runs on the investor identifier, and up to twenty executing brokers can be attached to a single account.

Bond Connect, Swap Connect and cross-border repo

The non-resident bond circuit is built separately from the equity one: access runs either through Bond Connect or through the direct CIBM Direct regime, and rate hedging runs through Swap Connect.

Bond Connect has run since July 2017 through the CMU nominee structure in Hong Kong, while CIBM Direct runs through an onshore settlement agent and gives direct holding; admission under both regimes is governed by the same PBoC instruments, No. 220 (2015) and No. 3 (2016). As at mid-2026 the Northbound leg had 844 approved investors, turnover of CNY 9.7 trillion in 2025 and a record CNY 1,224.1 billion in March 2026; the Southbound leg has run since September 2021 and cross-border bond repo since September 2025. Swap Connect (May 2023, Northbound only) covers rate hedging: swaps on FR007, SHIBOR and the 1-year LPR, a maximum tenor now of 30 years, a daily quota doubled to CNY 45 billion from 13.10.2025, and 364 approved investors. How these channels are built is set out in the China hub; for an equity holder the applied consequence is single — the bond circuit needs separate admission and gives no access to A-shares.

One figure for judging the durability of the inflow: foreign holdings on the interbank bond market have already turned — CNY 4,232 billion at the June 2025 peak against CNY 3,208 billion in July 2026, about 24% below the peak, even as trading activity set an all-time record in March 2026. Index inclusion created not a passive pool but a liquid trading market, sensitive to the rate differential and to hedging costs.

Index integration and why it stopped

The inclusion of A-shares in global indices took place in 2018–2020 and has not deepened since: the MSCI inclusion factor froze at 20% and has not moved since November 2019.

MSCI named four unresolved issues, without which no further increase is contemplated: access to hedging and derivatives, the short settlement cycle, the mismatch between mainland and Connect trading calendars, and the absence of an omnibus trading mechanism — none of them had been resolved by 2026 (MSCI press release of 28.02.2019, PDF, MSCI consultations). FTSE Russell and S&P DJI applied an inclusion factor of 25%; PRC bonds entered the Bloomberg Global Aggregate from April 2019, the JPMorgan GBI-EM from February 2020 and the FTSE WGBI from October 2021, in each case government paper only.

The applied conclusion is single and common to every provider: the inclusion criterion for a security is its availability through Stock Connect Northbound, so global indices are legally tied to the functioning of a single Hong Kong mechanism rather than to the PRC licensing regime.

Ownership limits and disclosure

Foreign ownership in a single issuer is capped by two thresholds — 10% per investor and 30% in aggregate — and breaching the second triggers a forced sale.

The thresholds follow the SSE page on foreign ownership and the HKEX Stock Connect FAQ. The 30% limit is counted across all channels at once: QFII/RQFII plus Northbound Connect plus GDRs under the Shanghai–London and China–Switzerland schemes.

Large-holding disclosure and the short-swing profit rule apply on top: on reaching 5% of a mainland company's shares an investor must notify the CSRC and the exchange in writing and inform the company within 3 working days, may not trade during that period, and must repeat the notification on every subsequent 5% change. Article 44 of the Securities Law strips a holder of 5% or more of the right to keep the profit on a buy-sell pair completed within six months.

Currency, repatriation and tax

Northbound settles in renminbi only, but that renminbi is offshore: the investor either pays in CNH or converts another currency through a designated Hong Kong settlement bank, which squares the position on the onshore market (HKMA, 21.06.2019, PDF).

Two consequences follow. First, the rate on the way in and on the way out is offshore CNH, which differs from onshore CNY, and that spread is the currency risk carried by a holder of a security priced in mainland renminbi. Second, Connect has no formal repatriation procedure at all — the funds are ring-fenced for the mechanism, the loop is closed, and on exit they are converted back and return the way they came; no tax clearance is required on exit, since taxes are either withheld at source or not levied. For QFI, remittance out is likewise free since the quotas were abolished, and since 7 May 2020 the audit report on repatriation has been replaced by a tax undertaking letter from the investor itself: the check has moved from prior approval to declaration with subsequent liability. What remains is the supporting documentation requirement and the unresolved VAT treatment on conversion of principal.

For a foreign holder the Hong Kong line of the same issuer is usually more convenient: a listing on the HKEX removes the eligible list, the quota and the professional-status filter alike, and on 31 July 2026 the A-to-H premium index stood at 123.16 — the A basket was 23% dearer than its own H-shares (Hang Seng Indexes, PDF). What the Hong Kong line does not remove is Chinese withholding tax on dividends.

A holder of A-shares pays two taxes in the PRC — 10% withholding on dividends and stamp duty on sale; capital gains are exempt indefinitely.

The tax figures follow Xinhua, 15.01.2026, the Shanghai Tax Service and, on stamp duty, Announcement 2023 No. 39. The bond and CDR reliefs expire on 31 December 2027; the exemption on capital gains from shares is indefinite. The history of the bond relief shows how this works: the exemption was granted for three years (November 2018 to November 2021), extended to the end of 2025, and extended again for 2026–2027 by a Ministry of Finance and State Taxation Administration announcement only on 13 January 2026 — that is, the market spent almost two weeks past the expiry of the previous term. A bond maturing after 31 December 2027 has no guaranteed tax treatment for its whole life.

Dividends and buybacks as a regulatory object

Since April 2024 dividend policy has ceased to be a corporate decision: it is tied to the controlling shareholder's personal liquidity and to the stock keeping its normal status.

The mechanics are spread across three documents. Cash Dividend Guidance No. 3, as amended on 19 December 2023, sets the disclosure standard; the new "Nine Articles" of April 2024 introduce the sanction — companies that pay no dividends for years, or pay little, face a restriction on share disposals by the major shareholder and a risk alert (ST); and the SSE listing rules, from 1 January 2025, specify the trigger: dividends over three years below 30% of average annual profit and below CNY 50 million. From the other side, "raid pre-listing dividends stripping the company bare" (突击清仓式分红) have been added to the negative list, and an offender against the disposal rules is required to buy back the shares sold and surrender the price difference.

The result: the dividend is tied not to profit but to the controlling shareholder's ability to sell down. Pay nothing and you cannot sell; pay too much before the IPO and you are not admitted.

Buyback rules have moved the other way and been liberalised: the SSE widened the conditions for a "defensive" buyback aimed at preserving company value, removed the prohibition on buying back during window periods, abolished the daily quantitative limits and lowered buyback thresholds, while requiring boards to take account of shareholders' views.

The data come from the SSE press release of 04.09.2026. The political priority given to dividends is explained by the failure of the primary market: equity capital raised on the SSE fell from CNY 847.7 billion (2022) to CNY 607.7 billion (2023) and CNY 234.8 billion (2024), while new listings fell from 103 to 32. With the primary market stalled, dividends and buybacks were the only working channel for returning capital to investors. Secondary offerings began to recover in 2026: 68 follow-on applications with a planned volume of CNY 127.2 billion, 61 of them approved. In parallel the exchange runs the "提质增效重回报" campaign — in its first edition from 22 March 2024 and in a version 2.0 with measurable targets from June 2026: by the end of August 2026 more than 80% of SSE companies had published value-and-return improvement plans, and the SSE 50 and SSE 180 constituents were covered in full.

Risks and constraints

The principal risk of a mainland listing is structural: the issuer takes on obligations that do not exist in other Asian jurisdictions, and cannot shed them after the offering.

The admission perimeter. The business of a company with foreign participation is checked against the negative list (the edition in force was approved by the State Council on 19 August 2024 — the first update since 2021, removing manufacturing restrictions entirely), control transactions are checked under the national security review, and STAR cuts out real estate and financial services regardless of the numbers.

The sanctions perimeter operates outside Chinese law and from both directions: the chain of beneficiaries and counterparties passes screening at the auditor, the sponsor and the banks, together with source of funds, while the investor is constrained by their own jurisdiction's prohibitions on holding the securities of particular issuers.

Intermediary selection and post-listing duties. Sponsor liability and mandatory co-investment on STAR mean the sponsor filters candidates more harshly than the regulator does, and the "申报即担责" principle removes its ability to walk away from a project without consequences. After listing, the ST dividend trigger, the 36-month lock-up and three years of sponsor supervision remain in place; and the renminbi raised stays renminbi — constrained repatriation is precisely why nobody has issued a CDR in seven years.

Risks for a holder. There are four: the limited eligible list and the sell-only regime when a stock drops out of it; the professional-status filter on STAR; the collective 30% limit with forced sale on a LIFO basis; and tax reliefs expiring on 31 December 2027 for bonds and CDRs. A fifth, less obvious one: short selling and securities lending on this market have been switched off in practice since 2024, which means directional shorts and classic market-neutral strategies cannot be run here.

What changed in 2024–⁠2026

A summary of the regulatory shifts that define the regime as at September 2026.

Who this route is open to

A mainland listing is an instrument for a business whose operations, revenue and tax history sit inside the PRC.

The route is open to three categories: a Chinese operating company that clears the numbers under one of the standards; a joint-stock company with foreign participation, provided the business passes the negative list and the ownership survives the requirement of unchanged control; and a red-chip holding company from CNY 10 billion of capitalisation. It is closed to a foreign company without Chinese assets, to a technology business worth less than CNY 1 billion, and to anyone expecting to be done within a year.

For an owner of capital the picture is better. The December 2024 easing admitted foreign individuals to strategic investment and cut the lock-up by two thirds, so the binding constraint is now the exit rather than the entry. The alternatives to the mainland: for an issuer, Hong Kong with direct admission and the 18A and 18C regimes; for a renminbi borrower, the interbank panda bond market; for an investor, Stock Connect and QFII (see the investor hub).