Hong Kong will launch its uncertificated securities market regime on November 16, allowing retail investors to hold shares directly in their own names electronically.
Initial public offerings will be the first to go paperless, while existing listed companies will transition to paperless shares in phases over the next five years.
While the new mechanism gives shareholders greater autonomy and eliminates bank or brokerage custody fees, they are strictly for holding rather than trading, said Pamela Chung Kong-hung, Vistra’s managing director.
"Unless you never plan to sell, you cannot do without a brokerage account," she said at a TV program.
While same-day transfers to brokers for sale are possible after IPO investors receive the shares via the new facility called USI, they are not instantaneous, which may affect short-term IPO traders looking to flip shares immediately on debut, Chung said.
Even investors keeping physical certificates may eventually need a USI account to receive scrip dividends or bonus shares once an issuer transitions, as paper certificates will no longer be printed, she added.
