LSEG completes first trade on new Global Equity Segment with Huatai Securities

The LSEG cross-border initiative, known as the Global Equity Segment, aims to use London as a global trading bridge between Asia and the Americas.

China’s Huatai Securities was among the first brokers to execute a trade on the London Stock Exchange Group’s (LSEG) recently launched Global Equity Segment (GES).

The cross-border initiative, which aims to leverage London’s time zone as a global bridge between Asia and the Americas, allows institutional and retail investors to trade and settle certain international securities, including US blue chip stocks and US-listed Asia ADRs, during London’s trading hours.

Building on the broker relationships established via the Shanghai-London Stock Connect, LSEG confirmed the first trade in USD was executed under GES on the London Stock Exchange MTF, using CREST Depository Interest (CDI) workflow for efficient cross-border settlement between the US and the UK within a T+2 settlement cycle.

“The Global Equity Segment allows a diverse set of investors to trade major international stocks, including the likes of Amazon, General Motors and major American Depository Receipts (ADRs) such as Alibaba and Ctrip in the world’s most convenient financial time zone,” Brian Schwieger, global head of equities at LSEG, commented. “The Global Equity Segment is a great example of the uniqueness of London’s time zone, trading expertise, and global investor community.”

This summer, Huatai Securities became the first global depositary receipt (GDR) issuer to use the Shanghai-London Stock Connect, which launched following an initial delay to encourage cross-border investment between the UK and China. Under the scheme, Shanghai-listed companies can apply to be admitted to trading on a new segment of the LSE main market, and companies which are listed in the UK can apply for submission to trading on the Shanghai Stock Exchange.

“Being the first listed GDR issuer under Shanghai-London Stock Connect has opened doors for us to new and broader markets,” Yi ZHOU, chairman of Huatai Securities, said. “Huatai is very pleased to see more impressive and innovative progress, such as GES, which has been made by LSE to further facilitate the interactions between UK and Asian capital markets.”

BNP Paribas Securities Services will provide custody services to clients globally trading GES securities, including moving positions between the UK and the US. The company’s head of financial intermediaries and corporates for Asia Pacific, Luc Renard, stated that BNP Paribas Securities Services will look to provide a “seamless, simple and efficient operating model” to support the GES initiative.

LSEG’s ongoing collaboration with China with the GES and Stock Connect initiatives follows an unsolicited, and now rejected, bid from Hong Kong Exchanges & Clearing (HKEX) to acquire the exchange group for £32 billion. The move to combine two of the largest market infrastructures in the world was made to connect financial markets in the east and the west, according to HKEX chief, Charles Li.

At an industry conference last month, LSEG’s CEO, David Schwimmer, stated that the London exchange operator is, in fact, betting on Shanghai being the long-term financial centre in China, instead of Hong Kong, which HKEX’s Li countered at the same event when making the case for the merger with LSEG.

“We view the capital controls around the Chinese market as constantly evolving, and the trend is that they are slowly but surely being removed. We see that as the inevitable path and we’ve invested in this through our relationships with the Shanghai London Stock Connect. We don’t take short-term perspectives… we view Shanghai as the financial centre in China,” Schwimmer said.