What is Program Trading?
Under HK & China regulations, meeting ANY ONE of the following four conditions qualifies your trading activity as Program Trading under HKEX China Stock Connect regulations
- Automatic Order Placement: Orders where content generation and transmission are entirely completed by computer programs, without any manual selection or review. The core order elements (securities code, buy/sell direction, quantity, price, and timing) are ALL automatically determined by computer.
- High Order Rate: Program trading more than 10 orders (including cancellations) within 1 second, with this pattern occurring more than 10 times in one trading day.
- Large Trading Volume and High Turnover: Program trading 50 or more stocks per day in the last 30 trading days AND having an annualized turnover rate exceeding 30 times during that period.
- Annualized turnover rate calculation: (Average daily Shanghai market trading amount over most recent 30 Stock Connect trading days) ÷ (Average daily Shanghai market holding amount over same period) × Number of Stock Connect trading days in current year
- Custom Software Usage: Using self-developed or other customized software for trading.
Please Note: The exchange reserves the right to identify additional activities or patterns as Program Trading requiring reporting, at its discretion. Clients will be notified of any such determinations as they arise.
Does Program Trading apply to orders executed via IB Algo or Market Orders?
Yes. The Program Trading criteria apply not only to orders submitted via your own program or trading software, but also to orders executed through IB's algorithmic execution services (IB Algo), including Market Orders.Please be aware of the following:
- When executing orders via IB Algo, IB's internal order routing system may split a single parent order into multiple child orders that are submitted to the exchange on your behalf
- These child orders are assessed by the exchange at the exchange level under your account, and may collectively trigger the High Order Rate threshold even if you only submitted a single order.
- If the resulting order activity meets any of the Program Trading thresholds, exchange pre-approval is required prior to conducting such activities
Can you provide examples of what is and is not considered Program Trading?
Examples of Program Trading
- Scenario 1: You use a trading algorithm that automatically selects all the following and place orders without manual intervention: securities code, buy/sell direction, quantity, price, and timing. This meets criterion #1 for automatic order placement.
- Scenario 2: Your trading software rapidly places and cancels orders to test market depth, generating more than 10 orders per second for more than 10 times per day even though you manually selected each security code. This meets criterion #2 for high order rate.
- Scenario 3: You manually select each security code at the start of the day, but then the rest of the order-making decisions (quantity, price, direction) are automated AND you trade at least 50 different security codes per day for over 30 days with high turnover. This meets criterion #3 for large trading volume and high turnover, even if criterion #1 is not fully met.
- Scenario 4: You developed a software for program trade, even if your trading volume is relatively low. This meets criterion #4 for custom software usage.
- Scenario 5: You submit a single large order via IB Algo (e.g., TWAP or VWAP). IB's internal system splits this into multiple child orders submitted to the exchange, resulting in more than 10 orders within 1 second occurring more than 10 times in one trading day. Even though you only submitted one order, this meets criterion #2 for high order rate as assessed by the exchange.
- Scenario 6: You place a Market Order on China Stock Connect via IB's platform. The resulting order activity at the exchange level may trigger the High Order Rate threshold, meeting criterion #2.
Examples NOT considered Program Trading
- Scenario 1: You manually select each security code, but then the rest of the order-making decisions (quantity, price, direction) are automated. This does not meet any criteria as not all order elements are automatically determined.
- Scenario 2: You set up conditional orders (e.g., stop-loss, take-profit) on our standard platform for a small number of securities. This does not meet criteria as standard platform features are used and trading parameters are manually determined.
- Scenario 3: You program trade 50+ stocks daily but your annualized turnover rate is below 30 times. This does not meet criterion #3 as both volume AND turnover thresholds must be exceeded.
- Scenario 4: You place rapid orders (more than 10 per second) but this pattern occurs fewer than 10 times per trading day. This does not meet criterion #2 as the frequency threshold is not sustained.
What happens if I engage in Program Trading without approval?
Trading without required approval will result in
- Order rejections by the exchange
- Account restrictions may be imposed
- You may be issued a formal warning letter by the exchange and required to complete the Program Trading application form retrospectively
How do I apply for Program Trading approval?
If your trading activities — whether through your own program, trading software, or via IB Algo (including Market Orders) — meet any one of the Program Trading criteria, you must obtain exchange pre-approval before conducting such activities on China Stock Connect.
Complete all of the following steps
- Download the "Northbound Program Trading Reporting Template" (available in Simplified Chinese only) from the HKEX website:
- SSE's Reporting Template
- SZSE's Reporting Template
- Complete the form and send an email with the completed Program Trading Application Form to: complianceopsapac@interactivebrokers.com
- Wait for approval confirmation before commencing Program Trading on China Stock Connect
What information is required for the application?
The application requires
- Basic information (name, brokerage client code, etc.)
- Fund information (scale, source, leverage)
- Transaction information (strategy types, execution methods)
- Trading software details
How long does the approval process take?
Typically, the approval process takes ** 5–10 business days after submission of complete documentation. You will receive notification once approved.Are there ongoing compliance requirements?
Yes. After approval
- You must adhere to the parameters specified in your application
- Any significant changes to your trading approach require updated reporting
- Your trading patterns will be monitored for compliance
- Exceeding HFT thresholds (300+ orders/second or 20,000+ daily orders) requires additional reporting
What is High-Frequency Trading (HFT) and what are the requirements?
High-Frequency Trading (HFT) is a subset of Program Trading characterized by extremely high order rates and volumes.
Under HK & China regulations, you are considered an HFT trader if your trading meets ** either of the following thresholds:
- More than 300 orders per second, or
- More than 20,000 orders in a single trading day
What should I do if I am an HFT trader?
- Complete the fields in the Program Trading Application Form for High Frequency Trading
- Submit the program test report and contingency plan as required
Are there ongoing compliance requirements for HFT?
Yes. After approval
- You must adhere to the parameters specified in your application
- Any significant changes to your trading approach require updated reporting
- Your trading patterns will be monitored for compliance
- Exceeding HFT thresholds (300+ orders/second or 20,000+ daily orders) requires additional reporting
Who can I contact for assistance?
- For questions about Program Trading requirements or application process, please contact our Support team Client Service/ Sales team and copy complianceopsapac@interactivebrokers.com