The Securities and Futures Commission said on Monday that the uncertificated securities market regime is targeted to be launched on November 16 this year, and the commencement notice will be tabled before the Legislative Council in the second quarter to bring the USM legislation into effect.
Upon implementation, newly listed securities will be required to be issued in paperless form from the time of listing, the regulator said, adding that for securities already listed before the launch date, issuers will be gradually integrated into the USM regime over five years.
Issuers and the market will receive advance notice regarding these arrangements, and investors who possess share certificates will have the flexibility to decide when they wish to convert their shares into paperless form, the SFC added.
"Implementation of the USM regime will further elevate our financial market infrastructure through greater investor choice, more streamlined processes, and more opportunities for straight-through-processing, " said Rico Leung Chung-yin, executive director of Supervision of Markets at SFC.
Richard Houng, Chairman of Federation of Share Registrars, who also serves as the managing director for Computershare Asia, said that USM will facilitate the digitisation, automation and streamlining of processes, and uncertificated securities allow investors to own shares in their names and transfer shares electronically, shortening transaction times while strengthening corporate governance.
"This will significantly enhance operational efficiency for market participants and further bolster Hong Kong's financial infrastructure, reinforcing the city's position as an international financial center," Houng added.
Currently, the Hong Kong Exchanges and Clearing (0388) and relevant share registrars are at an advanced stage of developing and testing their USM-related systems and processes, while market participants will be invited to participate in testing in the coming months.
The SFC has reviewed and approved amendments to various HKEX rules and operational procedures that are necessary for implementing USM, while the bourse operator and FSR have also updated their respective Information Papers on USM to include key fee changes under the new regime, with both related information to be published shortly.
Meanwhile, the SFC is reviewing applications from six FSR members who seek to become Approved Securities Registrars, and the information on the status of their applications will be published in the coming weeks.
