The People's Bank of Chin ("PBC") and the China Securities Regulatory Commission have jointly released the Circular on Issues concerning the Pilot Mechanism for the Mutual Connection of Transactions in the Shanghai and Hong Kong Stock Markets (the "Circular").

The Circular specifies the scope of receipts and payments of special RMB deposit accounts that are opened by Hong Kong Securities Clearing Company Ltd. for stock trading in the Shanghai stock market. The Circular provides that the interest rate applicable to such special RMB deposit accounts shall be subject to the relevant provisions of the PBC.

According to the Circular, China Securities Depository and Clearing Co., Ltd. ("CSDC") may open settlement accounts in banks in Hong Kong for stock trading on the Hong Kong stock market, which shall be specifically used for the movement of funds for the purpose of stock trading on the Hong Kong stock market. Meanwhile, CSDC or its branches may open special RMB deposit accounts in domestic banks for stock trading on the Hong Kong stock market, which shall be specifically used for the movement of funds for the purpose of stock trading in the Hong Kong stock market.

(Source: www.pbc.gov.cn)