Hong Kong Exchanges and Clearing Limited (HKEX) today (Wednesday) published a discussion paper examining the accelerated settlement for the Hong Kong cash equities market, aiming to lead market-wide discussion and build consensus with industry participants on how and when to move to a shorter settlement cycle for Hong Kong.
HKEX's cash market has been operating under a T+2 settlement cycle since 1992, while other cash markets globally have also been gradually shortening to a T+2 cycle over the past two decades. More recently, many markets have moved or are considering moving to a T+1 or faster settlement cycle. By the end of 2027, up to 88 per cent1 of cash equities globally by trade value will be in T+1 or T+0 markets, according to HKEX's analysis based on World Federation of Exchanges and global exchange statistics.
The discussion paper outlines the potential benefits and challenges of shortening the current T+2 settlement cycle in Hong Kong, referencing the experience of other jurisdictions during their transition journey, offering the basis for all stakeholders to join an informed discussion.
HKEX Chief Executive Officer, Bonnie Y Chan, said: "As a market operator, HKEX is fully committed to supporting the continued modernisation of Hong Kong's financial market infrastructure, ensuring that our financial ecosystem remains robust and fit for purpose. We are therefore delighted to be launching a discussion paper to lead the conversation on how and when to move to a shorter settlement cycle for our cash equities market."
"In a rapidly evolving global market landscape, there is urgency to seek a way forward, and we must as a financial community collaborate and act decisively to implement necessary enhancements. By leading the conversation, we hope to build consensus and develop a detailed implementation timeline that incorporates comprehensive stakeholder feedback. We encourage market participants to actively participate in this discussion, and we look forward to hearing from you."
As the discussion paper shows, transitioning to T+1 in Hong Kong brings both benefits and challenges. Potential benefits include enhanced market efficiency, reduced systemic risk, and closer alignment with global markets. At the same time, a transition also presents challenges, particularly for market participants navigating time zone differences, foreign exchange transactions, and shorter post-trade timelines. To adapt, market participants would need to upgrade systems, automate processes and coordinate across the market ecosystem to maintain efficiency and stability.
For the avoidance of doubt, the settlement cycle acceleration under discussion covers secondary transactions in the Hong Kong Cash Market. Primary transactions such as Initial Public Offerings aren't included in this discussion.
HKEX will actively engage market participants and stakeholders in this discussion and welcome their feedback. Industry participants are encouraged to read this paper, consider their existing circumstances, and respond on the topics of discussion by submitting their feedback through this portal by 1 September 2025 (Monday).
Notes:
1. Markets operating under a T+1 or T+0/T+1 basis currently include Mainland China, the US, Canada, Mexico, Argentina and India, and this is expected to also include the European Economic Area, the UK, and Switzerland by 2027.
About HKEX
Hong Kong Exchanges and Clearing Limited (HKEX) is a publicly-traded company (HKEX Stock Code: 388) and one of the world’s leading global exchange groups, offering a range of equity, derivative, commodity, fixed income and other financial markets, products and services, including the London Metal Exchange.
As a superconnector and gateway between East and West, HKEX facilitates the two-way flow of capital, ideas and dialogue between China and the rest of the world, through its pioneering Connect schemes, increasingly diversified product ecosystem and its deep, liquid and international markets.
HKEX is a purpose-led organisation which, across its business and through the work of HKEX Foundation, seeks to connect, promote and progress its markets and the communities it supports for the prosperity of all.
www.hkexgroup.com