On July 11, 2025, the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) (the Exchanges) issued the reporting guidelines for program trading[1] (the Guidelines) and their appendices, the Reporting Form, the Fill-in Instructions for the Reporting Form and the Notes on Fill-in the Reporting Form. The Guidelines clarify the program trading reporting requirements applicable to northbound investors engaged in program trading under the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect (the Stock Connect). They aim to strengthen the supervision and administration of program trading and safeguard trading order and market fairness and follow the principle of fair treatment for both domestic and foreign investors. The Guidelines and appendices took effect on January 12, 2026.
Following the issuance of the Guidelines and the ancillary appendices by the Exchanges, The Stock Exchange of Hong Kong Limited (HKEX) issued several circulars to remind market participants of the reporting arrangements. On January 9, 2026, the HKEX published the bilingual (Chinese and English) Northbound Program Trading Reporting FAQ (the FAQ)[2] to address some of the common questions raised by market participants regarding the northbound program trading reporting requirements. Below is a brief summary of the key points in the FAQ:
I. Scope of Reporting
The Fill-in Instructions set out the criteria for northbound investors that are subject to program trading reporting obligations[3]. The FAQ further clarifies the criteria.
1. Determination of High Degree of Automation in Order Placement
Under the first criterion listed in the Fill-in Instructions, a ‘high degree of automation’ in order placement refers to those investors whose core trading order elements (such as the security code, buy/sell direction, order size and order price), as well as the timing of the order placement, are automatically determined by a computer program.
The FAQ’s Q3 further clarifies that if the core trading order elements are automatically generated by a computer program, such activity would fall within the reporting criterion, regardless of whether the algorithm of the computer program originated from a northbound investor, or a HKEX participant (i.e., the northbound broker).
In other words, even if the trading system provided by their northbound broker does not automatically generate the core elements of the trading orders, the northbound investor should still confirm whether the core elements of the orders submitted for execution are automatically generated by the investor’s own proprietary algorithms, to assess whether they fall within the reporting scope.
The FAQ’s Q27 clarifies that the HFT’s additional information reporting shall cover information about the system involved in generating HFT orders. Irrespective of whether such HFT orders are generated based on (i) the trading system provided by the northbound brokers, or (ii) the investor’s own system used for generating trading decisions, where both systems are involved in HFT orders, information on both systems shall be provided.
2. Responsible Party for Reporting Where Trading Executed via Northbound Brokers’ System
Where an investor conducts trading through client-side software provided by a northbound broker with certain automated functions, and such trading falls within the reporting scope, the FAQ’s Q2 indicates that, under the Guidelines, the reporting obligations shall be borne by the northbound program trading investors.
Northbound brokers are required to establish mechanisms for monitoring and identifying program trading and for verifying reported information. This is to identify clients that meet the initial reporting or material change reporting triggers, remind such clients to fulfil their reporting obligations, and verify (within the scope of the information available to them) the information reported by their clients.
In respect to the scenario under Article 5 of the Guidelines, i.e., where a client and a HKEX participant agree via an entrustment agreement or other method that the HKEX participant may automatically generate or place trading orders through a computer program, and the HKEX participant may report on behalf of the client, the FAQ’s Q13 clarifies that even if the HKEX participant does not possess the client’s account funding information, the HKEX participant is still required to fill in the funding information fields (unless the northbound investor has selected a designated broker to centrally report the funding information), and should contact the client to obtain their account funding information to ensure completeness and compliance of the report.
3. Accounts Triggering Reporting Criteria during Special Events or Extreme Market Volatility
For accounts that do not usually meet the reporting threshold during daily trading but occasionally trigger the reporting criteria during special events such as index rebalancing or under conditions of significant market volatility, the HKEX clarifies in the FAQ that if any of the criterion is triggered, the reporting obligations shall be fulfilled accordingly. Specifically: (1) for general program trading, where any of the thresholds under Article 1 of the Fill-in Instructions are triggered, the investor shall report in accordance with the applicable requirements; and (2) for HFT, where the occasional trigger scenarios involve HFT as defined under the Detailed Implementation Rules for the Management of Program Trading (the Implementation Rules) [4], the investor shall fulfill the program trading reporting, and if the investor is not eligible for exemption, HFT additional reporting is also required.
II. Information to be Reported
1. Determination of Quantitative Trading
The Reporting Form issued by the Exchanges requires northbound investors to indicate whether they conduct quantitative trading. Under Article 21 of the Fill-in Instructions, quantitative trading refers to trading where a computer program automatically selects specific securities and timings based on preset strategies. This definition is consistent with the definition under the circulars on matters relating to stock program trading reporting released by the Exchanges in 2023[5]. Northbound investors shall determine whether they fall within the scope of quantitative trading based on their own trading activities.
Regarding how investors should determine whether their activities constitute quantitative trading, the FAQ’s Q6 outlines that it emphasizes automation throughout the entire trading process, with low levels of human intervention, and investors should make their own judgment based on their actual trading activities. The HKEX further reiterates the verification obligations for northbound brokers. For example, if a broker is aware of an investor using quantitative strategies and the investor has answered ‘no’ in the applicable fields in the Reporting Form, the broker shall remind the investor and confirm whether the reported information is accurate.
2. Central Reporting of Account Funding Information via a Designated Broker
Under the Fill-in Instructions, investors shall report on a per northbound investor identification code (or Broker-to-Client Assigned Number, the BCAN) basis. Where an investor opens multiple accounts with different HKEX participants, the investor shall submit reports through the respective HKEX participants. However, for institutional investors who open accounts with multiple HKEX participants (including accounts of the manager and accounts of products managed by such manager), with respect to accounts opened under the same legal entity identifier (LEI), such investors may select one of these entrusted HKEX participants as the designated broker and report (at the institution level, i.e., aggregated across all accounts opened under the same LEI) the relevant funding information fields. The investor is not required to repeatedly fill in the account funding information for accounts opened under the same LEI with other HKEX participants.
Additionally, the Fill-in Instructions require the funding information of product accounts, including the size, source, proportion of funds, size and source of the leveraged funds and the leverage ratio, to be filled in on a product basis.
The FAQ’s Q9 further clarifies the reporting requirements where multiple BCAN accounts are assigned to investors by different northbound brokers, as follows:
(1) Reporting Funding Information without Centralized Reporting via a Designated Broker
The account funding size is required to report as of the reporting date, and the calculations should be performed separately for the SSE and the SZSE, and shall be reported at the BCAN level. Where multiple BCANs are opened under the same fund, reporting shall be made at the fund level, i.e., all BCANs for the same fund should report the same size of the fund for the SSE or the SZSE respectively.
(2) Reporting Funding Information with Centralized Reporting via a Designated Broker
For an institutional investor opening accounts with multiple HKEX participants under the same LEI, they may select one HKEX participant as the designated broker and report the funding information fields at the LEI level. Where an institutional investor holds multiple LEIs and appoints the designated broker, they may allocate its total funding size among accounts under each LEI based on its actual positions and ensure that the aggregate funding size across accounts under all LEIs equals the total funding size of such investor.
As for the reporting submission sequence by multiple brokers, the FAQ indicates that institutional investors opting for the designated broker arrangement for centrally reporting funding information should first submit the report via the designated broker. After confirmation by the Exchange, the designated broker shall promptly notify the institutional investor, following which the institutional investor may submit reports through other brokers without repeatedly filling in the funding information fields.
3. Program Trading Software
With respect to the field Program Trading Software and Version under the Reporting Form, the FAQ’s Q12 indicates that any software involved in order generation shall be reported. In other words, regardless of whether such software is an algorithm engine or an algorithm platform, if it is involved in generating trading orders, the name, version number and developer of such software shall be reported.
III. Additional Reporting Requirements for HFT
Under the northbound program trading reporting regime, northbound program trading investors that meet the HFT criteria are required to submit HFT-related information in addition to the basic information required, with an exemption for HFT investors that satisfy specific conditions[6].
The HKEX published the Checklist for Submission of Supporting Documents for the HFT Reporting Exemption (the Checklist) on October 31, 2025, which requires HFT investors applying for such an exemption (except for QFI license holders) to submit the Reporting Form, together with the supporting documents for HFT reporting exemption listed therein.
At this state, there are no specific supporting materials to be submitted regarding the exemption condition of ‘only executing trade orders by using preset order splitting algorithms’.
It is worth noting that the submission of the Checklist and the supporting documents does not constitute any HFT reporting exemption and the SSE or the SZSE may nevertheless request the investor to submit additional HFT-related information.
IV. Existing Investors and the Grace Period
For existing investors who have already engaged in program trading prior to the effective date of the Guidelines, a three-month grace period after the implementation of the Guidelines (i.e., before April 10, 2026) is granted.
Pursuant to the Fill-in Instructions, existing investors refer to northbound investors who: (1) have engaged in program trading within one year prior to the effectiveness of the Guidelines; (2) have met the relevant reporting criteria as set out in the Fill-in Instructions; and (3) will continue to engage in such program trading activities thereafter. For northbound program trading investors who do not fall within the scope of existing investors, the FAQ specifies that such investors shall fulfil the reporting obligations prior to first engaging in program trading (i.e., prior to first triggering any reporting criterion) under the Stock Connect. Such investors may conduct program trading only after the northbound brokers have completed verification and confirmed their reports.
Our Observations
Although the HKEX states in the FAQ that this document has no legal effect and that the requirements shall remain subject to the provisions issued by the SSE and the SZSE, the FAQ does provide important practical guidance for northbound investors under Stock Connect in fulfilling the program trading reporting obligations.
Given that the Guidelines and the ancillary documents have already taken effect, we recommend that existing investors, in accordance with the grace period arrangement, complete program trading reporting as soon as practicable, or by April 10, 2026. For northbound investors planning to engage in program trading under the Stock Connect, we recommend commencing preparations in a timely manner to avoid any impact on subsequent program trading activities due to delays in completing the reporting. To mitigate the risk of under-reporting, northbound brokers are advised to fulfil their obligations relating to monitoring and identification, reminding and urging, and information verification. They should also, in accordance with the applicable requirements, fully disclose to their clients the risks of the regulatory consequences arising from violations of the reporting rules.
We will continue to monitor any further rules or circulars issued by the SSE, the SZSE and the HKEX and share the latest developments with our clients.
1. Guideline No. 2 on the Application of the Shanghai Stock Exchange Securities Trading Rules — Program Trading Reporting for Shanghai-Hong Kong Stock Connect Investors and Guideline No. 3 on the Shenzhen Stock Exchange Securities Trading Business — Program Trading Reporting for Shenzhen-Hong Kong Stock Connect Investors.
2. According to the FAQ, if there is any discrepancy between the English version and the Chinese version, the Chinese version shall prevail.
3. Pursuant to the Fill-in Instructions, Stock Connect investors engaging in trading on either the SSE or the SZSE that meet any of the following criteria are required to fulfill program reporting obligations:
(1) A high degree of automation in order placement i.e., program trading investors whose core elements such as the security code, buy/sell direction, order size and order price, as well as the timing of the order placement, are automatically determined by computers.
(2) A high order submission rate i.e., program trading investors who submit more than 10 orders (including order cancellations) within 1 second, with such occurrences happening 10 or more times in a single trading day.
(3) A high number of traded stocks and turnover rate i.e., program trading investors who, on average, trade no fewer than 50 listed stocks daily over the most recent 30 Stock Connect trading days, with an annualized turnover rate exceeding 30 times over the same period.
(4) The use of proprietary or customized software i.e., program trading investors using self-developed or other customized software for trading.
(5) Other circumstances deemed reportable by the Exchanges.
Investors using client software with certain automated functions provided by HKEX participants (i.e., the brokers), but do not meet the above criteria, are not required to report.
4. Pursuant to Article 33 of the Implementation Rules, the following trading behaviors are classified as high-frequency trading:
(1) The maximum number of order placement/cancellation per second for a single account reaches 300 orders or more;
(2) The maximum number of order placement/cancellations per day for a single account reaches 20,000 or more;
(3) Other circumstances as determined by the Exchanges.
5. The Circular on Matters Concerning the Stock Program Trading Reporting and the Circular on Matters Concerning Strengthening the Administration of Program Trading.
6. The Guidelines exempt investors that satisfy all the following conditions from the HFT additional reporting requirements:
(1) Investors who fall within the scope of a) fund managers who exclusively issue public funds; b) HKEX participants engaged in asset management business and who meet the relevant requirements; c) northbound program trading investors with Qualified Foreign Investor (QFI) licenses; and d) other investors recognized by the Exchanges.
(2) Investors who execute trade orders automatically (only at the stage of order execution) by using preset order splitting algorithms for the purpose of reducing the market impact of large orders or ensuring fairness across different investment portfolios; and
(3) Investors who have already fulfilled the basic information reporting obligations as required.
