Shanghai and Shenzhen mutually recognise derivative contract accounts

Shanghai Stock Exchange (SSE) on Tuesday released revised guidance allowing the mutual recognition of stock options accounts between SSE and Shenzhen Stock Exchange (SZSE).

This marks the first update of the guidelines since 2020, and more than a decade since the SSE launched its first exchange traded fund (ETF) options product.

The revised Guidelines for Securities Companies' Stock Option Brokerage Business (2026 Revision) and the Guidelines for Futures Company Stock Option Brokerage Business (2026 Revision), which take effect from the date of issuance, include three core components.

These are the full mutual recognition of Shanghai and Shenzhen derivatives contract accounts, allowing qualified foreign investors to participate in Shanghai ETF options hedging, and optimising investor holding limits and account opening rules.

The aim is to broaden participation channels, reduce institutional costs while clarifying that trading is limited to hedging purposes.

Previously, the options accounts of SSE and SZSE were independent, requiring investors to complete a full review process, including a Rmb 500,000 (£55,053) asset threshold, six months of trading experience, knowledge testing and trading simulation, making account opening procedures cumbersome.

With the new regulations, investors who have already opened Shenzhen derivatives contract accounts can be exempt from all Shanghai market access reviews, breaking down the barriers between the two markets.

Currently, the two exchanges offer nine ETF option, including five on the SSE and four on the SZSE. Opening up access of these ETFs to qualified foreign investors is also a key goal.

The new regulations raise the position limits held by newly opened investors from 20 to 100 shares while the asset threshold for the highest position limit has been lowered from Rmb 5 million to Rmb 3 million. The restriction on individuals and institutions opening up to five contract accounts has also been removed.

Chinese derivatives legal and compliance experts weigh in on the impact of the China Securities and Regulatory Commission's (CSRC) brokerage clampdown and implications on the derivatives brokerage landscape.

The CSRC in May released new derivatives trading rules that will come into effect on November 16.