HKEX to Enhance Post-Trade Systems for T+1 Settlement Cycle
The Financial Secretary today delivered the new Budget Speech at the Legislative Council, during which he addressed the development of Hong Kong’s capital market. He stated that reforms to the trading mechanism would continue. The Hong Kong Stock Exchange will gradually introduce new features to its post-trade system starting mid-year and carry out a system upgrade to ensure technical compatibility with a T+1 settlement cycle by the end of the year, preparing for a shortened settlement cycle.
He also stated that, building on the reduction of the minimum tick size implemented in mid-this year, the Hong Kong Stock Exchange (HKEX) and the Securities and Futures Commission (SFC) will propose suggestions within the year to improve the board lot system (commonly known as the “lot size” system). This aims to align trading arrangements more closely with the liquidity characteristics and investment needs of shares of different sizes, facilitating transactions and enhancing efficiency. The government has also submitted subsidiary legislation to the Legislative Council to implement a paperless securities market system. The SFC and HKEX are working closely with the industry to conduct system upgrades and technical preparations, with the expectation of implementation in early next year.
He pointed out that, to meet investors’ risk management needs, the SFC will consult the market on proposals to increase position limits for major index derivative instruments. This would enhance flexibility for investors in using these tools while safeguarding financial stability. To align with the latest economic trends and corporate needs, listing requirements and ongoing post-listing obligations will be reviewed; listing rules and arrangements will be examined to improve the approval process; thresholds for dual primary listings and secondary listings will be optimized; and the market structure will be reviewed, including studying the establishment of an off-exchange trading mechanism for delisted companies.
