HKEX's Charles Li: Will publish a white paper on whether the Hong Kong stock market should implement T+1 settlement in the first half of next year
Hong Kong Exchanges and Clearing Limited (HKEX) CEO Laura M Cha announced that a white paper on whether to implement T+1 settlement in the Hong Kong stock market will be released in the first half of next year. She pointed out that there is an increasing demand in the market for rapid fund inflow and outflow, and HKEX will optimize its systems with the goal of being technically ready for T+1 by the end of next year. The final decision on implementation will be based on the opinions of market stakeholders, with the main obstacle to T+1 being market readiness rather than technical issues
According to the Vantage News APP, the US stock market will implement the trading standard settlement cycle at the end of May this year, shortening the settlement cycle from two business days after the trading day (T+2) to T+1. Charles Li, CEO of Hong Kong Exchanges and Clearing Limited (00388), stated in a media interview that the Hong Kong stock market is currently experiencing significant volatility, with a stronger demand from the market for faster fund movements. The exchange will release a white paper on whether the Hong Kong stock market should implement T+1 settlement in the first half of next year, allowing the market to digest it initially before conducting rational analysis and discussions.
He mentioned that he hopes to initiate an objective and thorough discussion in the market first. During this period, the Hong Kong Exchanges and Clearing Limited will "do their homework" to optimize the system, aiming to be technically ready for T+1 by the end of next year. However, the final decision on implementation will be made after "fully considering" the opinions of market stakeholders, and consultation will only proceed with sufficient basis.
He also mentioned that the main obstacle to T+1 is not a technical issue. According to the current system upgrade plan of the Hong Kong Exchanges and Clearing Limited's spot market settlement platform, technical support for transitioning to T+1 settlement can be provided by the end of next year. The question lies in whether the market is prepared.
He explained that the concept of T+1 is simply to improve efficiency, ensuring that transactions are settled quickly. However, compressing the settlement period will also increase operational risks and costs. He admitted that it is premature to discuss the implementation timetable at this stage. Even if the market agrees to implement T+1, each company will need to adjust its processes, which may involve manpower, technology, and related changes, each with its own budget. Therefore, the timing and method of market advancement will depend on whether there is sufficient basis for consultation after collecting opinions