Flags of China, Hong Kong, and Hong Kong Stock Exchange in front of the Exchange Square. The Hong Kong bourse failed to buy the London Stock Exchange in an embarrassing rebuff in August. Photo: iStock

The Hong Kong Stock Exchange is planning to introduce an investor ID model for northbound trading under stock connects as early as September 10, according to Li Xiaojia, the CEO of HKEX, The Paper reported.

Northbound trading refers to foreign investors investing in the mainland Chinese stock markets via the Shanghai-Hong Kong Stock Connect or the Shenzhen-Hong Kong Stock Link.

The regime will identify orders at the client level rather than the broker level to better detect potential misconduct, responding to mainland regulators’ need to facilitate their market surveillance.

Regarding suspicions that the system will discourage the interconnection and northbound transactions, Li said that market participants have now reached a consensus on regulatory transparency.

The newly introduced system will have no impact on the existing business, he insisted.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now.