What is Huluntong?

Huluntong, that is, the interconnection mechanism between Shanghai Stock Exchange (hereinafter referred to as "Shanghai Stock Exchange") and London Stock Exchange (hereinafter referred to as "Shanghai Stock Exchange"), refers to the qualified listed companies in the two places, which issue depositary receipts (hereinafter referred to as DR) in accordance with the laws and regulations of the other market and list on the other market. At the same time, through the arrangement of cross-border conversion mechanism between depositary receipts and underlying securities, the interconnection between the two markets will be realized.

Huluntong includes two business directions: east and west. East business refers to China Depositary Receipts (CDRs) of companies listed on the Shanghai Stock Exchange. Westward business refers to the global depositary receipts (hereinafter referred to as GDR) of A-share listed companies in Shanghai Stock Exchange.

In order to get a good start, DR's basic securities are limited to stocks, and companies listed on the Shanghai Stock Exchange are not allowed to directly raise funds in China's domestic market by issuing CDRs of new shares. The listing of CDRs is achieved by establishing initial liquidity of domestic cross-border conversion institutions, that is, domestic cross-border conversion institutions convert their basic stocks bought in overseas markets or obtained by other legal means into CDRs according to relevant regulations and depository agreements, and then go public for trading. A-share listed companies on the Shanghai Stock Exchange can directly raise funds in the UK market by issuing GDR. Qualified securities institutions in the two places can directly open securities and capital accounts in the other market, and engage in cross-border conversion of depositary receipts in accordance with relevant regulations.