Shenzhen Stock Exchange in China

History

The first stock exchange in the city of Shenzhen was created in 1990. It was then called the Shenzhen Securities Exchange (SSE) and was located in Shekou, a small fishing village in the western part of the city. At the same time, the Shenzhen Commodities Exchange was created in the Futian district, the city center. In 1992, the two exchanges were combined and moved to their present location in the central Luohu district. The Shenzhen Securities Exchange was converted into a joint-stock company and renamed the Shenzhen Stock Exchange. In 1993, the Shenzhen Stock Exchange started trading options. In the same year, it launched the first Chinese Depositary Receipts (CDRs) program. In 1995, it launched the first Chinese section 21 public company offering. After the Chinese government allowed the establishment of new, privately owned exchanges in 1998, the Shenzhen Stock Exchange formed a joint venture with a private company (SZSE Private Ltd, now a wholly owned subsidiary of SZSE) to create the Shenzhen New Market. In 2001, it moved to its current premises in the Qianhai district. The Shenzhen New Market was rebranded as the Shenzhen Stock Exchange in July 2018. In 2001, Shenzhen Stock Exchange became a member of the Hong Kong Stock Exchange (HKSE) and the two exchanges subsequently entered into a business alliance. Also that year, Shenzhen Stock Exchange became one of the five newly formed mainland exchanges allowed to launch initial public offerings (IPOs). In 2002, it was approved to trade futures and options, followed by the approval of the trading of ETFs in 2003. The Shenzhen Stock Exchange was approved to become a national securities exchange in 2007 and was rebranded as the Shenzhen Stock Exchange in 2008. In the same year, it launched the new third board, allowing smaller, less advanced companies to list and trade on the exchange. On March 19, 2015, the Shenzhen Stock Exchange became the world's first stock exchange to use distributed-ledger technology to manage its clearing and trade settlement process.

Exchange Infrastructure

SZSE’s trading operations are mainly conducted through two trading rooms, located in Luohu and Qianhai. The exchange’s trading operations are managed by its wholly owned subsidiary, Shenzhen Securities Asset Exchange (SZSE), which is supervised by a board of directors. Trading hours at the SZSE are from 10:00 am to 10:30 am (morning trading) and 3:00 pm to 3:30 pm (afternoon trading) on all six days of the week. The daily trading hours of the Qianhai trading room are the same as those of the Luohu trading room. Trading facilities include the Stock Exchange Trading System (SETS), the Shanghai-Shenzhen Stock Connect, a Chinese Securities Translation and Trading System (CTTS), an Automated Trading Environment (ASE), and an Order Management System (OMS). The SETS is a fully automated system designed to support trading, settlement, and risk management operations. The CTTS assists in the translation and exchange of trading information. The SETS, ASE, and OMS are interconnected to the Stock Exchange Clearing Corporation of China (SZCC), which is a central securities clearing and settlement organization established to provide clearing and settlement services for the Shenzhen Stock Exchange and other stock exchanges.

Listing Requirements

A company desiring to list its shares on the Shenzhen Stock Exchange must meet the following requirements: The company must have a net worth of at least RMB 10 million and have been in business for at least two years. The company’s business must be legal and general. Its business operations must be profitable. The company’s management must be qualified, and the financial statements must be reliable.

Trading Platforms

The trading of stocks on the Shenzhen Stock Exchange is conducted through several electronic trading platforms. Currently, SZSE has three trading platforms: The SETS is an inter-exchange trading platform that facilitates the trading of stocks between the two exchanges. It also links with the T+ trading platform of the Hong Kong Stock Exchange (HKSE). The T+ trading platform is a stock trading platform for open-end mutual funds. It is operated by the HKSE as a part of the HKSE’s trading platform. The C-Share trading platform is an inter-dealer trading platform that provides quotation and trading services for the stocks of Chinese companies listed on the SZSE and various foreign exchanges.

Corporate Governance and transparency

SZSE is governed by a board of directors that is responsible for overall management and oversight. The board is composed of representatives of the exchange, company executives, and institutional investors. The exchange is supervised by the China Securities Regulatory Commission, which is the country’s securities and futures regulatory authority. The SZSE is monitored by a Market Regulation Department to ensure “fair and orderly trading,” protect investors’ rights, and safeguard the interests of the listed companies. The SZSE is committed to transparency and corporate governance. All listed companies are required to follow the “Rules Governing Securities Trading and Exchange-related Activities” of the SZSE and the “Rules Governing Companies Listed in the Stock Market.”