Investors will be able to subscribe to MTR Corporation (MTRC) shares electronically, directly via their bank accounts when the city's underground railway company goes public in the autumn. The initial public offering (IPO) of the government-owned transport company will also mark the first time that an electronic subscription method, or a so-called e-IPO will be widely used in Hong Kong. The SAR Government, which plans to sell HK$30 billion - a small proportion - of its MTRC stake over two years, intends to start selling the first tranche in September or October, and is understood to be eager to use an electronic subscription method in its first attempt to partially privatise its asset. The Government is particularly keen on using technology to avoid a repeat of the chaos that surrounded the Tom.com IPO in March this year. Financial Secretary Donald Tsang Yam-kuen has criticised the handling of the Tom.com share offer, saying it was 'unthinkable' for such chaos to occur in Hong Kong following the frenzied scenes as tens of thousands of investors tried to submit share applications for the Internet content provider. 'The Government definitely wants to promote it [e-IPO],' a source said, 'it wants to modernise Hong Kong.' But Hong Kong investors at present can subscribe to shares using e-IPO services provided by some brokerage houses or Hong Kong Central Clearing. To use the e-IPO services of both brokerage houses and Central Clearing, investors have to open an account with the institution in question. Central Clearing's system is linked to an investors' direct participation scheme which enables investors to do e-IPO business as well as have a direct account to settle their share transactions. However, this is not popular yet. Meanwhile, Hongkong Bank, an arm of HSBC Holdings and Central Registration - a subsidiary of Hongkong Bank and Australian leading share registry Computershare - have jointly proposed the launch of their own e-IPO service. The proposed service would leverage on the facilities of Hongkong Bank and its affiliate Hang Seng Bank, which have about three million bank accounts in total. The service would allow investors to use paperless methods to subscribe to shares, such as the utilisation of telephone banking or the Internet - which gives access to investors' own bank accounts as well as the complete share subscription process online - or via automated teller machines at a later stage. This is how it will work: Once an investor has decided to use the Internet as a way of subscribing to new shares and they have completed and submitted the relevant information, the subscription data will be transferred to Central Registration, which will be responsible for share allocation and other arrangements, as it would under the ordinary process. Investors would directly draw money from their bank accounts to pay for the shares. This method would involve fewer procedures and the service providers think this would be the fastest and least expensive method to promote a widely used e-IPO method. It is understood that Hongkong Bank has agreed to open the system to others in Hong Kong and is currently in talks with different banks with the intention of inviting them to join the system. The new system could also be used in other IPOs. However, the proposal is still subject to the approval of the Securities and Future Commission. If it is approved, any person in the SAR with a bank account, will not have to open another broking account, and can use electronic means, rather than filling in paper subscription forms and lining up in banks to submit their application forms. It is believed that the Government is eager to set the ball rolling by making the MTRC the first candidate to adopt this e-IPO method, given its large offering size and significance. Besides, this would be a good time to promote the use of new electronic methods. Nevertheless, the government-owned transport company will use multiple-IPO subscription methods - not giving up the traditional IPO subscription method, as it is unlikely investors will change their habits overnight. Even though the talk of an e-IPO for the MTRC is just speculation at the moment, it has wider implications for the future issue of IPOs. Market observers said that the Government has been exploring various methods of IPO delivery since 1993, including the introduction of paperless methods, as a first step towards the development of the securities market. Hardly any progress has been achieved during the past seven years. The picture of tens of thousands people crowded into several Hongkong Bank branches just to submit the IPO subscription forms for Tom.com and Sunevision is still fresh and vivid in many people's memory. Since then the issue has been raised several times, and despite the fact that a number of regional countries including Singapore and Australia, are using scriptless e-IPO methods or enact fully scriptless share transactions, Hong Kong has yet to introduce a system. Even Shenzhen, just north of the border, is known to have used an e-IPO method. Frank Chan, assistant director of business development at the Central Registration, said the company proposed the new method jointly with Hongkong Bank in the hopes that it would help promote market development in the territory. E-IPO is the first step along the scriptless development path. The using of electronic methods could hasten information dissemination and thus enhance market efficiency, which is good for overall market development, he said. He added that when a scriptless method is fully developed, the system could be opened for overseas investors to subscribe to, or trade Hong Kong stocks, which would also promote the local stock market.