Hong Kong to cut time between IPO pricing and trading of shares in a move likely to boost city’s appeal as listing destination
- New digital interface set to launch in October will cut the settlement period from five business days to two, HKEX said on Wednesday
- Move will ‘enhance market efficiency and strengthen the competitiveness’ of Hong Kong’s IPO market, says HKEX boss Nicolas Aguzin
“FINI”, which stands for Fast Interface for New Issuance, is set to launch in October, and will cut the time between IPO pricing and commencement of trade from five business days to two, Hong Kong Exchanges and Clearing (HKEX) said in an announcement on Wednesday.
Operating on a cloud-based platform, FINI will enable different IPO stakeholders such as sponsors, underwriters, legal advisers, banks, clearing participants, share registrars and regulators to collaborate and perform their respective roles in an offering digitally in real time.
“By shortening the time between IPO pricing and the start of trading, [we can] enhance market efficiency and strengthen the competitiveness and attractiveness of Hong Kong’s IPO market,” said HKEX chief executive officer Nicolas Aguzin.
The settlement platform will “modernise and digitalise Hong Kong’s IPO settlement process, driving efficiency and supporting the long term development of Hong Kong as a capital-raising centre,” HKEX said in a statement.
The exact launch date of FINI will be subject to “market readiness”, it said.
The HKEX finished testing the new system earlier this month. It will arrange market practice sessions and rehearsals in July and August to simulate interactive, end-to-end IPO settlement operations under FINI, according to the announcement.
“FINI will allow different stakeholders … to utilise a more modernised platform with real-time information reflected at all times. It will streamline many processes,” said Robert Lee Wai-wang, the lawmaker for the financial services sector and CEO of local brokerage Grand Capital Holdings.
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HKEX CEO Nicolas Aguzin on the future of Hong Kong’s capital market
Investors who borrow money to subscribe to an IPO will benefit from the shorter settlement period, said Tom Chan Pak-lam, the permanent honourable president of the Institute of Securities Dealers.
“The shorter settlement cycle is good news for investors and may encourage more to subscribe to new IPOs, which will help boost the markets,” he said.
“Some brokers may lose interest income due to the shorter settlement cycle. However, Hong Kong needs to move on with the new system as our IPO settlement time is just too long.
“Some overseas markets’ IPO settlement time can be T+0. The new system will help Hong Kong catch up with other international centres and strengthen our role as a leading IPO market.”
