BNP Paribas has launched a solution to support UCITS funds that plan to invest in Chinese A-Shares via the Hong Kong Shanghai Stock Connect programme.
On 1 December, the first UCITS fund was approved fro trading on the programme. The solution provided by BNP Paribas includes execution, clearing and custody services, helping clients to make investments more smoothly and overcoming some of the risks associated with transferring stock from custodian to broker.
Under the current stock connect rules, traders and brokers trading Northbound are subject to pre-trade checks before selling orders, while investors are required to transfer stocks from custodians to brokers before execution, creating risk.
The solution means that assets will stay in custody with BNP Paribas security services, meaning that no additional securities will be delivered before selling.
Lawrence Au, head of BNP Paribas Securities Services in the Asia Pacific region, said: “We welcome the recent announcement of a fast-track procedure for approving UCITS funds’ applications to trade via Stock Connect.”
“The Association of the Luxembourg Fund Industry (ALFI) stated that UCITS funds should give due consideration to a number of factors before participating in the Stock Connect. Our integrated solution addresses precisely these concerns. "
Hugo Leung, deputy CEO of BNP Paribas Securities in Asia, added: “BNP Paribas offers multiple solutions for clients who are interested in Northbound trading. In addition to the integrated broker-custodian solution, clients can also use our synthetic security products (Delta One) including P-notes and equity swaps to tap into Stock Connect.”
“We are fully operational and have on-boarded a lot of asset management clients in Asia Pacific and Europe since the programme went live. Our client base has been growing day by day.”
