Markets· Equity· Derivative

Shanghai plans to grant foreign employees rights to receive A-shares as stock options

minutes 2019/08/14 09:16:07
Shanghai, A-share market, option

Aug 14, 2019 (China Knowledge) - The Shanghai municipal government is working with the State Administration of Foreign Exchange (SAFE) on plans to relax restrictions on foreigners' ownership on China's A-share market. Shanghai is considering to allow foreign employees of regional headquarters of multinational firms to receive stock options on the A-share market and to purchase mainland-listed A-shares.

The move is expected to attract more regional headquarters to set up in Shanghai, a step closer to the International metropolis to achieve its goal of being a global financial powerhouse.

A-share options grant investors the right but not obligation to buy or sell stocks at an agreed-upon price and date, and are regarded as compensation contracts between employers and employees. Moreover, they are incorporated as part of employees’ pay packages.

The stock options guidelines did not reveal when the option will be available on the market. Such introduction signals China's regulators want to encourage foreign firms to grant stock options to their employees and attract more global talent.

China has been working on big plans to make its financial market more open. The country has yet to approve foreign-controlled companies to raise funds on mainland stock markets through an initial public offering (IPO). However, last September, China allowed foreign employees working within Mainland China to trade RMB-denominated A-shares directly for the first time. That measure was estimated to grant trading rights to about 1 million such foreign qualified residents.

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