The Hong Kong Exchanges and Clearing (0388) plans to shorten the settlement cycle for the Hong Kong cash market from the current T+2 to T+1 starting from the fourth quarter of next year.
The new cycle will apply to the secondary market, while the settlement timelines for initial public offerings and Stock Connect trades will remain unchanged.
The HKEX will launch a four-week market consultation, which is expected to end on 18 May.
It has urged market participants to review their internal readiness and begin preparations as early as possible. To facilitate the shortened settlement cycle, the HKEX proposes to adjust the post-trade processing timetable and delivery workflow so that post-trade activities can be completed earlier on the trade date.
In light of the shorter post-trade window, HKEX suggests extending service hours for settlement-related activities and may slightly revise the existing settlement risk management framework, while trading execution arrangements will remain unchanged.
HKEX said it will also explore developing a new workflow platform for institutional stakeholders, including fund managers, custodians, and brokers, to enhance operational efficiency and support the new arrangement.
HKEX will release relevant technical specifications to assist market participants in making necessary system upgrades. The T+1 settlement cycle is expected to be implemented in the fourth quarter of next year, subject to market readiness and regulatory approval.
Once the operating model is finalized, relevant rules will be amended, and further market consultations will be conducted on adjustments to various trading processes and market activities.
Bonnie Chan Yi-ting, chief executive at HKEX, said that adopting a T+1 settlement cycle will further strengthen Hong Kong’s market competitiveness by making trading safer and faster, while laying the foundation for future infrastructure optimization and innovation
