The Shanghai Stock Exchange (SSE) is the largest in mainland China. Each company listed on the SSE has two main types of stock available: A-shares and B-shares. Most of the SSE's market cap comes from previously state-owned companies, such as major commercial banks and insurance companies. In terms of total market cap for equity exchanges, the SSE ranks fourth in the world, with only the NYSE, Nasdaq, and Tokyo Stock Exchange surpassing it. Additionally, companies listed on the SSE must prepare and disclose periodic reports within the specified time limit according to laws, administrative regulations, and applicable rules.
The China Securities Regulatory Commission (CSRC) oversees the Shanghai Stock Exchange (SSE), the foremost stock exchange on the Chinese mainland. Within its purview, the SSE facilitates the trading of a diverse array of financial instruments, including stocks, funds, bonds, and derivatives.
How Does the Shanghai Stock Exchange (SSE) Work?
The Shanghai Stock Exchange (SSE) operates with two primary classes of stocks for each listed company: A-shares and B-shares. B-shares are traded in U.S. dollars and are typically open to foreign investors. In contrast, A-shares are quoted in yuan and are accessible to foreign investors exclusively through the Qualified Foreign Institutional Investor (QFII) program.
Chinese equities also find a home on the Hong Kong Exchange, where H-shares in Chinese firms have been trading for an extended period. These equities are available for foreign investment and are denominated in Hong Kong dollars (HKD).
The SSE predominantly comprises formerly state-owned enterprises, such as major commercial banks and insurance companies. Many of these entities have only been listed on the exchange since 2001. Regarding total market capitalization for equity exchanges, the SSE ranks fourth worldwide, trailing behind the NYSE, Nasdaq, and Tokyo Stock Exchange.
Shanghai Stock Exchange (SSE) Listing Requirements
To secure a listing on the Shanghai Stock Exchange (SSE), companies must adhere to the following stipulations:
- CSRC Approval: Companies seeking SSE listing must first obtain approval from the China Securities Regulatory Commission (CSRC).
- Minimum Share Capital: The company's total share capital must surpass RMB 50 million (renminbi).
- Public Offering Requirement: The quantity of publicly-offered stock should exceed 25% of the total issued shares. However, if a company's total share capital exceeds RMB 400 million, this percentage is reduced to 10%.
- Clean Track Record: Companies must not have engaged in significant illegal activities or presented false financial reports over the past three years.
Additionally, the SSE mandates that listed companies adhere to specific reporting timelines in compliance with relevant laws, administrative regulations, and applicable rules:
- Annual Report: Disclosure within four months from the end of each financial year.
- Interim Report: Disclosure within two months following the close of the first half of each financial year.
- Quarterly Report: Disclosure within one month after the end of both the first three months and the first nine months of the financial year. Notably, the first-quarter report must be disclosed later than the previous year's annual report.
For the annual report, a qualified CPA firm in the securities and futures sector must conduct an audit. However, the SSE typically exempts companies from auditing their interim and quarterly reports.
The Shanghai Stock Exchange (SSE) is mainland China's largest stock exchange, boasting two primary stock types (A-shares and B-shares) for every listed company. The SSE's substantial market capitalization predominantly stems from formerly state-owned entities, including major financial institutions. The SSE ranks fourth in total market capitalization among equity exchanges globally, trailing only behind the NYSE, Nasdaq, and Tokyo Stock Exchange. Furthermore, companies seeking listing on the SSE must meet rigorous requirements and adhere to stringent reporting timelines, as overseen by the China Securities Regulatory Commission (CSRC). This framework ensures transparency and compliance within this influential financial marketplace.