Hong Kong Exchanges and Clearing’s (HKEX) plan to upgrade its stock trading system to shorten the settlement time has gained support from fund managers and stockbrokers.
While they believe the move would help HKEX catch up with international exchanges, reduce risks and enhance liquidity, they urged the city’s bourse operator to give the market sufficient time to review and prepare for any changes as part of the reform.
HKEX CEO Bonnie Chan Yiting and Financial Secretary Paul Chan Mo-po said separately in February that the company planned to explore shortening the settlement cycle.
The Hong Kong stock exchange and many other major bourses use the so-called T+2 settlement cycle, which requires traders to pay up within two days after initiating a trade.
HKEX’s Chan said with exchanges in the US and Canada shortening their settlement times to T+1 in May, and bourses in the UK and Europe exploring the same option, Hong Kong had to stay abreast of the developments. Meanwhile, the T+1 cycle has always been the norm in China.
