London Stock Exchange has laid out plan for trading link with Shanghai

London Stock Exchange Group has laid out a blueprint for its long-awaited trading link with Shanghai, an initiative that will further China's efforts to integrate with the international financial system.

The London-Shanghai Stock Connect will allow companies from China to sell global depository receipts in the UK, and enable London-traded firms to list similar securities in Shanghai, according to a LSE presentation seen by Bloomberg News. Starting later this year, the securities issued by Chinese companies will appear on what LSE calls the Shanghai Board. A spokesman for LSE declined to comment.

The London link will be yet another step in China's financial opening which began in earnest with a stock connect to Hong Kong in 2014. For the LSE, the move will help the exchange offset a possible decline in activity with Russian companies after the step-up of US sanctions.

"This is a real step in the integration of China's financial markets," said Karine Hirn, partner at East Capital Asset Management in Hong Kong. "What's exciting about this project is that it's Chinese money going into Western companies."

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An agreement for some sort of exchange connection between London and Shanghai has been in the works since at least September 2015, when plans were disclosed during a visit to China by then-UK chancellor of the exchequer George Osborne. In November 2016, LSE and the Shanghai bourse agreed to "develop rules and implementation arrangements" – Bloomberg