Hong Kong is set to transition to a paperless securities market (USM) as early as 2026, marking a significant milestone in enhancing market accessibility, resilience, and competitiveness. The USM initiative will streamline trading and post-trade processes while boosting investor confidence through clearer information, further solidifying Hong Kong's appeal to global participants. Investors will benefit from simplified procedures, reduced costs, fewer delays, and greater certainty, reinforcing Hong Kong's role as a bridge between capital and opportunities. HKEX remains committed to advancing market enhancements to deliver superior services and experiences for investors, businesses, and participants worldwide, strengthening Hong Kong's position as a leading international financial hub.
The USM will modernize market operations, enabling investors to hold and manage securities digitally in their own names more efficiently. Under this framework, listed or soon-to-be-listed prescribed securities will phase out physical documents and manual processes, shifting entirely to digital operations to improve financial infrastructure efficiency. To support the USM rollout, HKEX will introduce new securities depository procedures and adjust fee structures accordingly, collaborating closely with the Securities and Futures Commission (SFC), the Hong Kong Securities Registration Company Limited, and other stakeholders to align with global standards for faster and more efficient investor-issuer interactions.
The USM will bring substantial benefits to Hong Kong's market. Investors will gain the ability to hold, manage, and trade securities digitally in their own names, while the existing Central Clearing and Settlement System (CCASS) agent structure will remain intact. Securities held via CCASS will continue to be registered under Hong Kong Securities Clearing (Nominees) Limited, maintaining service levels while significantly shortening transfer and registration timelines. By optimizing post-trade infrastructure and eliminating paper-based delays, settlement processes will accelerate, boosting overall market capacity and operational efficiency. For issuers, direct investor ownership enhances transparency, communication, and corporate governance.
Environmentally, the USM will reduce carbon footprints linked to printing, transporting, and storing physical documents, advancing Hong Kong's sustainability goals. The initiative also lays the groundwork for future enhancements, including paperless reporting, streamlined e-communication, smarter post-trade solutions, and simplified lot size frameworks.
Preparing for the USM requires industry-wide coordination, with prescribed securities transitioning in phases. Issuers will announce their transition timelines in due course. During the transition, paper-based and digital holdings will operate concurrently until full migration ensures uninterrupted market readiness. HKEX will work closely with intermediaries and issuers to plan and implement necessary system upgrades, conducting drills to familiarize participants with the upgraded infrastructure. Concurrently, fee structures will be adjusted to ensure simplicity, fairness, and predictability, aligning with digital operations and sustainable market growth.
HKEX has already introduced multiple market optimizations in recent years, including the adverse weather trading arrangement launched in September 2024, ensuring uninterrupted trading during seven severe weather days, and the August 2025 IPO pricing mechanism reform, enhancing Hong Kong's appeal as a fundraising hub.