An industry official sees Hong Kong and other Asian stock markets moving towards shorter settlement periods to reduce risks and increase trading efficiencies.
James Drumm, managing director of Omgeo, a trade-management services company, said Hong Kong securities regulators and brokers were working on upgrading facilities to shorten the settlement time.
This would enable investors to settle all trades the following day, instead of the two days after trade allowed at present.
'A shorter settlement time would help to increase the competitiveness of the Hong Kong stock markets,' he said.
'It will reduce risks in the markets, while it will also increase market efficiency.'
Under existing settlement rules, the buyer of a stock needs to pay only two days after a trade is made, while the seller has two days to deliver the shares.
Mr Drumm said the two-day gap increased the chances of settlement errors and defaults.