Why HKEX’s board lot reform could pose challenges for HSBC and others
HSBC, Xiaomi, AIA and Pop Mart are among some 650 Hong Kong-listed firms that may need to change trading units under proposed lot reforms
HSBC Holdings, Xiaomi, AIA, Pop Mart International, Tsingtao Brewery and others are among about 650 listed companies that may need to change their trading unit under proposed reforms by bourse operator Hong Kong Exchanges and Clearing (HKEX).
Market participants generally support the reform as it would bring Hong Kong’s stock market trading in line with international practices and allow retail investors to more easily trade a wider range of stocks, but they also warn of challenges in implementing the changes.
Here is what you need to know about this board lot reform.
What is the board lot reform about?
HKEX in December issued a consultation paper seeking views until March 12, on what would be its largest-ever reform of trading units, also known as board lots.
Currently there are 44 lot sizes, ranging from the smallest lot size of 10 shares per lot to the largest at 100,000 shares per lot. The proposed reform would limit lot sizes to eight options – one, 50, 100, 500, 1,000, 2,000, 5,000 and 10,000.
HSBC now trades at 400 shares per lot, while Pop Mart, AIA and Xiaomi trade at 200 shares per lot. They are among the 25 per cent of companies that would need to change their trading units under the proposal.
The reform would also halve the minimum value per lot to HK$1,000 (US$128) and introduce a new maximum value of HK$50,000 per lot. The HK$50,000 threshold is for stocks with more than 100 shares per lot. About 16 companies, including Akeso and Tsingtao Brewery, are above the upper limit.