Hong Kong stock exchange aims to modernise IPO process, slashing times for debutants to list as it strives to protect global crown
- Proposed new electronic platform would shorten the gap between an IPO being priced and its trading debut from five business days to just one day
- The proposal by the stock exchange operator would improve market efficiency and reduce risks, according to analysts
Hong Kong Exchanges and Clearing (HKEX) is proposing a revamp that would drastically speed up the process of initial public offerings, helping the city maintain its edge as a hub for stock market listings.
The modernisation would involve replacing time-consuming paper subscriptions with an electronic system that would cut the so-called IPO settlement process by 80 per cent and bring the city’s stock market in line with its counterparts in the US and Europe.
The proposal would digitalise the IPO process with a new platform called Fast Interface for New Issuance (FINI), according to a statement released by HKEX, the bourse operator, on Monday. If it gets the go-ahead as scheduled in the second quarter of 2022, it will allow companies, regulators, bankers and brokers to interact when handling the entire settlement process.
It would shorten the settlement process – the gap between the pricing of an IPO and its trading date – from five business days to just one day.
“The new proposal will enhance market efficiency and reduce market risks,” said Tom Chan Pak-lam, chairman of the Institute of Securities Dealers, an industry body for local stockbrokers.
HKEX is collecting views on the idea until January 15, it said in the statement.
However, the logistics of the IPO process has not changed in more than two decades.