What Is the Shanghai Stock Exchange (SSE)?
The Shanghai Stock Exchange (SSE) is the largest stock exchange in mainland China.It is a nonprofit organization run by the China Securities Regulatory Commission (CSRC). Stocks, funds, bonds, and derivatives are all traded on the exchange.
Key Takeaways
- The Shanghai Stock Exchange (SSE) is the largest exchange in mainland China.
- There are two main classes of stock for every company listed on the SSE—A-shares and B-shares.
- Most of the total market cap of the SSE is made up of formerly state-run companies like major commercial banks and insurance companies.
- The SSE ranksfourth in the world in terms of total market cap for equity exchanges, behind only the NYSE, Nasdaq, and Tokyo Stock Exchange.
- The SSE requires that companies listed on the exchangeprepare and disclose periodic reports within the time limit specified in laws, administrative regulations, and various applicable rules.
How the Shanghai Stock Exchange (SSE) Works
On the Shanghai Stock Exchange (SSE), there are two main classes of stock for every listed company traded on the exchange—A-shares and B-shares.
B-shares are quoted in U.S. dollarsand are generally open to foreign investment. A-shares are quoted in yuanand are only available to foreign investment through a qualified program known as QFII.
Chinese equities are also traded on theHong Kong Exchange, which has been trading H-shares in Chinese companies for many years.These equities are also open to foreign investmentand are denominated in Hong Kong dollars (HKD).
Most of the total market cap of the SSE is made up of formerly state-run companies like major commercial banks and insurance companies. Many of these companies have only been trading on the exchange since 2001. The SSE ranksfourth in the world in terms of total market cap for equity exchanges, behind only the NYSE, Nasdaq, and Tokyo Stock Exchange.
Requirements for the Shanghai Stock Exchange (SSE)
A company hoping to be listed on the SSE must meet the following requirements:
- The company must have gainedthe approval of the CSRC.
- It must have a total share capital of more thanRMB (renminbi) 50 million.
- The amountof publicly-offered stockmust be greaterthan 25% of totalissued sharesunless acompany's total share capital is more than RMB 400 million, in which case the percentage is reduced to only 10%.
- The company must not have committed any major illegal acts orfinancial report falsehoods over the past three years.
The SSE requires that companies listed on the exchangeprepare and disclose periodic reports within the time limit specified in laws, administrative regulations, and various applicable rules.
The annual report should be disclosed within four months from the end of each financial year, the interim report within two monthsof the end of the first half of each financial year, and the quarterly report within one month from the end of the first three months and the end of the first nine months of the financial year. It is also required that the first-quarter report be disclosed no earlier than the annual report of the previous year.
The company's annual report must be audited by a qualifying CPA firmin the securities- and futures-related business. The SSE generally exempts companies from having to audittheir interim and quarterly reports.
